Tender Offer by Telenor Finland Holding Oy for Shares in Dna Plc

OFFER DOCUMENT 28 August 2019

MANDATORY PUBLIC TENDER OFFER BY TELENOR FINLAND HOLDING OY FOR SHARES IN DNA PLC

Telenor Finland Holding Oy (the "Offeror") hereby offers to acquire, by a mandatory public tender offer in accordance with Chapter 11 of the Finnish Securities Markets Act (746/2012, as amended) (the "SMA") and in accordance with the terms and conditions set forth in this tender offer document (the "Tender Offer Document"), all of the issued and outstanding shares in DNA Plc (the "Company" or "DNA") that are not held by DNA or its group companies or by the Offeror or its group companies (the "Shares" or, individually, a "Share") (the "Tender Offer").

The Offeror is a limited liability company incorporated under the laws of Finland. The Offeror is a wholly owned indirect subsidiary of Telenor ASA ("Telenor"). Telenor is a public limited liability company incorporated under the laws of Norway. The shares in Telenor are listed on the official list of Oslo Børs ASA.

DNA is a public limited liability company incorporated under the laws of Finland. The shares in DNA, including the Shares, are listed on the official list of Nasdaq Helsinki Ltd ("Nasdaq Helsinki").

Telenor has on 9 April 2019 (the "Transaction Announcement Date") entered into separate agreements with Finda Telecoms Oy and PHP Holding Oy to acquire the 37,385,454 shares in DNA held by Finda Telecoms Oy and the 34,105,827 shares in DNA held by PHP Holding Oy at that time (the "SPAs"). Completion of the SPAs was subject to certain conditions, including approval by general meetings of the seller entities and required regulatory approvals. Following completion of all conditions to completion under the SPAs on 19 August 2019, the Offeror has on 21 August 2019 acquired altogether 71,491,281 shares in DNA, corresponding to 54.04% of all shares and votes in DNA. As a result of the acquisition of the shares under the SPAs, the Offeror is obliged to launch a mandatory public tender offer in accordance with Chapter 11, Section 19 of the SMA for all Shares and any securities entitling to shares in DNA.

The consideration offered for each Share validly tendered in the Tender Offer is EUR 20.90 in cash (the "Offer Price").

The Offer Price represents a premium of approximately 7.4% compared to the closing price of the DNA shares on Nasdaq Helsinki on the last trading day prior to the Transaction Announcement Date, a premium of approximately 21.3% compared to the volume-weighted average trading price of the DNA shares during the three-month period preceding the Transaction Announcement Date, when adjusted for cash dividend of EUR 1.10 prior to the ex-dividend date of 29 March 2019 for the dividend resolved upon at the 2019 annual general meeting of DNA and a premium of approximately 14.8% compared to the volume-weighted average trading price of the DNA shares during the three-month period preceding the Transaction Announcement Date, without the aforementioned dividend adjustment.

The Offer Price represents a discount of approximately -0.1% compared to the closing price of the DNA shares on Nasdaq Helsinki on the last trading day prior to the announcement of the Offeror's obligation to launch the Tender Offer and a discount of approximately -0.5% compared to the volume-weighted average trading price of the DNA shares during the three-month period preceding the announcement of the Offeror's obligation to launch the Tender Offer.

The completion of the Tender Offer is not subject to any conditions.

The acceptance period for the Tender Offer (the "Offer Period") will begin at 9:00 a.m. (Finnish time) on 29 August 2019 and expire at 4:00 p.m. (Finnish time) on 26 September 2019, unless the Tender Offer is extended. For details, please see the section "Terms and Conditions of the Tender Offer".

At the date of this Tender Offer Document, the Board of Directors of DNA has not given its statement in accordance with Chapter 11, Section 13 of the SMA.

The information on this front page should be read in conjunction with, and is qualified in its entirety by, the more detailed information in this Tender Offer Document, in particular the section "Terms and Conditions of the Tender Offer".

THIS TENDER OFFER IS NOT BEING MADE, DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW AND THIS TENDER OFFER DOCUMENT AND RELATED ACCEPTANCE FORMS ARE NOT AND MAY NOT BE DISTRUBUTED, FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW BY ANY MEANS WHATSOEVER INCLUDING, WITHOUT LIMITATION, MAIL, FACSIMILE TRANSMISSION, E-MAIL OR TELEPHONE. IN PARTICULAR, THE TENDER OFFER IS NOT MADE IN AND THIS TENDER OFFER DOCUMENT MUST UNDER NO CIRCUMSTANCES BE DISTRIBUTED INTO CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG OR ANY OTHER JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW.

Financial Advisor to the Offeror and Financial Advisor to the Offeror Arranger of the Tender Offer

Skandinaviska Enskilda Banken AB (publ) Helsinki Branch Barclays IMPORTANT INFORMATION

This Tender Offer Document has been prepared in accordance with Finnish law, including the Finnish Securities Markets Act (746/2012, as amended) (the "SMA"), Decree 1022/2012 of the Ministry of Finance and Regulations and guidelines 9/2013 on Takeover bids and mandatory bids (FSA 10/01.00/2013) by the Finnish Financial Supervisory Authority (the "FIN-FSA"). The Tender Offer Document and the Tender Offer shall be governed by Finnish law and any disputes related thereto shall be exclusively settled by Finnish courts of competent jurisdiction.

The Tender Offer Document is available in Finnish and in English. In the event of any discrepancy between the two language versions, the Finnish language version shall prevail.

The FIN-FSA has approved the Finnish language version of this Tender Offer Document. The FIN-FSA assumes no responsibility for the accuracy of the information presented therein. The decision number of the FIN-FSA's approval decision is FIVA 18/02.05.05/2019.

The Finnish language version of this Tender Offer Document will be available on the internet at www.telenor.com/telenor- ostotarjous-dna as of 28 August 2019 and at offices of SEB on or about 2 September 2019. The English language version of this Tender Offer Document will be available on the internet at www.telenor.com/telenor-offer-for-dna as of 28 August 2019.

The Offeror may also acquire Shares in public trading on Nasdaq Helsinki or otherwise before, during and/or after the Offer Period (including any extension thereof) or otherwise outside the Tender Offer to the extent permitted by Finnish and any other applicable law.

This Tender Offer is not being made, directly or indirectly in any jurisdiction where prohibited by applicable law and this Tender Offer Document and related acceptance forms are not and may not be distributed, forwarded or transmitted into or from any jurisdiction where prohibited by applicable law by any means whatsoever including, without limitation, mail, facsimile transmission, e-mail or telephone. In particular, the Tender Offer is not made and this Tender Offer Document must under no circumstances be distributed into Canada, Japan, Australia, South Africa or Hong Kong or any other jurisdiction where prohibited by applicable law.

All financial and other information regarding DNA presented in this Tender Offer Document is solely based on the financial statements published by DNA for the financial year ended on 31 December 2018, DNA's interim report for the six-month period ending 30 June 2019 entries in the Finnish Trade Register and other publicly available information, unless expressly stated otherwise. Consequently, the Offeror does not accept any responsibility whatsoever for such information except for its accurate restatement of such information herein.

Except to the extent required by mandatory law, this Tender Offer Document will neither be supplemented or updated with any financial information or other stock exchange releases published by DNA subsequent to the date of this Tender Offer Document, nor will the Offeror otherwise separately announce the publishing of such financial information or stock exchange releases.

In this Tender Offer Document, "Company" and "DNA" refer to DNA or DNA and its group companies, on a combined basis, as the context may require.

In this Tender Offer Document, "Telenor" refer to Telenor or Telenor and its group companies, on a combined basis, as the context may require.

Skandinaviska Enskilda Banken AB (publ) Helsinki Branch ("SEB"), which is under the supervision of the Swedish Financial Supervisory Authority (Finansinspektionen) in cooperation with the Finnish Financial Supervisory Authority (Finanssivalvonta), is acting as financial adviser to the Offeror and no one else in connection with the Tender Offer and arranger in relation to the Tender Offer, will not regard any other person than the Offeror as its client in relation to the Tender Offer and will not be responsible to anyone other than the Offeror for providing protection afforded to clients of Skandinaviska Enskilda Banken AB (publ) Helsinki Branch nor for providing advice in relation to the Tender Offer.

Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively as financial adviser for the Offeror and no one else in connection with the Tender Offer and will not be responsible to anyone other than the Offeror for providing the protections afforded to clients of Barclays nor for providing advice in relation to the Tender Offer or any other matter referred to in this document.

ii Notice to the Shareholders in the United States

U.S. shareholders are advised that the Shares are not listed on a U.S. securities exchange and that the Company is not subject to the periodic reporting requirements of the U.S. Securities Exchange Act of 1934 (the "Exchange Act"), and is not required to, and does not, file any reports with the U.S. Securities and Exchange Commission (the "SEC") thereunder. The Tender Offer is made to the Company's shareholders resident in the United States on the same terms and conditions as those made to all other shareholders of the Company to whom an offer is made. Any information documents, including this Tender Offer Document, are being disseminated to U.S. shareholders on a basis comparable to the method that such documents are provided to the Company's other shareholders.

The Tender Offer is made for the issued and outstanding shares in the Company, which is domiciled in Finland. Information distributed in connection with the Tender Offer is subject to the disclosure requirements of Finland, which are different from those of the United States. In particular, the financial statements and financial information included in this Tender Offer Document have been prepared in accordance with applicable accounting standards in Finland, which may not be comparable to the financial statements or financial information of U.S. companies.

It may be difficult for the Company's shareholders to enforce their rights and any claims they may have arising under the federal securities laws, since the Offeror and the Company are located in non-U.S. jurisdictions, and some or all of their respective officers and directors may be residents of non-U.S. jurisdictions. The Company's shareholders may not be able to sue the Offeror or the Company or their respective officers or directors in a non-U.S. court for violations of the U.S. securities laws. It may be difficult to compel the Offeror and the Company and their respective affiliates to subject themselves to a U.S. court's judgement.

The Tender Offer is made in the United States pursuant to Section 14 (e) and Regulation 14E under the Exchange Act as a "Tier II" tender offer, and otherwise in accordance with the requirements of Finnish law. Accordingly, the Tender Offer will be subject to disclosure and other procedural requirements, including with respect to the offer timetable, settlement procedures and timing of payments that are different from those applicable under U.S. domestic tender offer procedures and law.

To the extent permissible under applicable law or regulations, the Offeror and its affiliates or brokers (acting as agents for the Offeror or its affiliates, as applicable) may from time to time, and other than pursuant to the Tender Offer, directly or indirectly, purchase or arrange to purchase, Shares or any securities that are convertible into, exchangeable for or exercisable for such Shares. To the extent information about such purchases or arrangements to purchase is made public in Finland, such information will be disclosed by means of a press release or other means reasonably calculated to inform U.S- shareholders of the Company of such information. In addition, the financial advisors to the Offeror may also engage in ordinary course trading activities in securities of the Company, which may include purchases or arrangements to purchase such securities.

The receipt of cash pursuant to the Tender Offer by a U.S. shareholder may be taxable transaction for U.S. federal income tax purposes and under applicable U.S. state and local, as well as foreign and other, tax laws. Each shareholder is urged to consult its independent professional adviser immediately regarding the tax consequences of accepting the Tender Offer.

Neither the SEC nor any U.S. state securities commission has approved or disapproved the Tender Offer, or passed any comment upon the adequacy or completeness of the Tender Offer Document. Any representation to the contrary is a criminal offence in the United States.

Notice to the Shareholders in the United Kingdom

THIS TENDER OFFER DOCUMENT OR ANY OTHER DOCUMENT OR MATERIALS RELATING TO THE TENDER OFFER IS NOT BEING MADE AND HAVE NOT BEEN APPROVED BY AN AUTHORISED PERSON FOR THE PURPOSES OF SECTION 21 OF THE UK FINANCIAL SERVICES AND MARKETS ACT 2000 ("FSMA"). ACCORDINGLY, THIS TENDER OFFER DOCUMENT OR ANY OTHER DOCUMENT OR MATERIALS RELATING TO THE TENDER OFFER ARE NOT BEING DISTRIBUTED TO, AND MUST NOT BE PASSED ON TO, THE GENERAL PUBLIC IN THE UNITED KINDOM. THE COMMUNICATION OF THIS TENDER OFFER DOCUMENT OR ANY OTHER DOCUMENT OR MATERIALS RELATING TO THE TENDER OFFER IS EXEMPT FROM THE RESTRICTION ON FINANCIAL PROMOTIONS UNDER SECTION 21 OF THE FSMA ON THE BASIS THAT IT IS A COMMUNICATION BY OR ON BEHALF OF A BODY CORPORATE WHICH RELATES TO A TRANSACTION TO ACQUIRE DAY TO DAY CONTROL OF THE AFFAIRS OF A BODY CORPORATE; OR TO ACQUIRE 50 PER CENT OR MORE OF THE VOTING SHARES IN A BODY CORPORATE (SUCH PERCENTAGE INCLUDING VOTING SHARES IN SUCH BODY CORPORATE ALREADY HELD BY THE BODY CORPORATE ACQUIRING SUCH VOTING SHARES), WITHIN ARTICLE 62 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005.

iii Forward Looking Statements

This Tender Offer Document includes "forward looking statements", including statements about the expected timing and completion of the Tender Offer, and language indicating trends and future plans. Generally, words such as may, should, aim, will, expect, intend, estimate, anticipate, believe, plan, seek, contemplate, envisage, continue or similar expressions identify forward-looking statements.

These statements are subject to risks, uncertainties, assumptions and other important factors, many of which may be beyond the control of the Offeror, and could cause actual results to differ materially from those expressed or implied in these forward- looking statements.

Although the Offeror believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, no assurance can be given that such statements will be fulfilled or prove to be correct, and no representations are made as to the future accuracy and completeness of such statements. The Offeror undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws or by any appropriate regulatory authority.

Certain Key Dates

The following timetable sets forth certain key dates relating to the Tender Offer, provided that the Offer Period has not been extended in accordance with the terms and conditions of the Tender Offer:

21 August 2019 Announcement of the Offeror's obligation to launch the Tender Offer 29 August 2019 Offer Period commences 26 September 2019 Offer Period expires (estimated) 27 September 2019 Announcement of the preliminary result of the Tender Offer (estimated) 1 October 2019 Announcement of the final result of the Tender Offer (estimated) 2 October 2019 Completion of the sale of Shares tendered (estimated) 2 October 2019 Payment of the Offer Price (estimated) (actual time of receipt of the payment will depend on the schedules of money transaction between financial institutions)

iv PERSONS RESPONSIBLE FOR THE TENDER OFFER DOCUMENT

Offeror

Telenor Finland Holding Oy Address: Snarøyveien 30, N-1360 Fornebu, Norway Domicile: Helsinki, Finland

The Board of Directors of the Offeror

Nils Katla, Chairperson Henning Thronsen, Board memeber Gaute Simen Gravir, Board member

Parent Company of the Telenor Group

Telenor ASA Address: Snarøyveien 30, N-1360 Fornebu, Norway Domicile: Fornebu, Norway

The Board of Directors of the Parent Company of the Telenor Group

Gunn Wærsted, Chairperson Jørgen Kildahl, Vice Chairperson Jacob Fonnesbech Aqraou, Board member Sally Margaret Davis, Board member Grethe Helene Viksaas, Board member Jon Erik Reinhardsen, Board member Jan Otto Eriksen, Board member Espen Smistad, Board member Anita Helen Steine, Board member

This Tender Offer Document has been prepared by the Offeror pursuant to Chapter 11, Section 11 of the SMA for purposes of the Tender Offer set out herein.

The persons responsible for the Tender Offer Document represent that to their best knowledge and understanding the information contained in this Tender Offer Document is accurate and complete and no information has been omitted that is likely to affect the assessment of the merits of the Tender Offer.

All information presented in the Tender Offer Document concerning DNA has been extracted from, and has been provided exclusively based upon, publicly available information. Consequently, the Offeror does not accept responsibility for such information, except for the correct restatement of such information herein.

28 August 2019

Telenor Finland Holding Oy Telenor ASA

v ADVISORS TO THE OFFEROR

Financial advisor to the Offeror in connection with the Tender Offer and Arranger of the Tender Offer

Skandinaviska Enskilda Banken AB (publ) Helsinki Branch Eteläesplanadi 18 FI-00130 Helsinki Finland

Financial advisor to the Offeror in connection with the Tender Offer

Barclays Bank PLC 5 The North Colonnade E14 4BB London United Kingdom

Legal advisor to the Offeror in connection with the Tender Offer

Dittmar & Indrenius Attorneys Ltd Pohjoisesplanadi 25 A FI-00100 Helsinki Finland

vi TABLE OF CONTENTS

1. BACKGROUND, OBJECTIVES AND EFFECTS OF THE TENDER OFFER ...... 1

1.1 Background to the Tender Offer ...... 1 1.2 Effects on DNA's Operations, Assets and Personnel ...... 1 1.3 Strategic Future Plans ...... 2 1.4 Compliance with the Recommendation Referred to in Chapter 11, Section 28 of the SMA ...... 2 1.5 Statements Concerning the Tender Offer ...... 2 1.6 Effect's on the Offeror's Operations, Assets and Personnel ...... 2 1.7 Financing of the Tender Offer ...... 2 1.8 Offeror's Future Plans with respect to DNA Shares ...... 2 1.9 Regulatory Approvals ...... 3 1.10 Fees to Advisors...... 3 1.11 Applicable Law ...... 3

2. INFORMATION ON THE GROUNDS FOR PRICING OF THE TENDER OFFER ...... 4

2.1 Grounds for Determining the Offer Price ...... 4 2.2 Trading Prices and Price Development of DNA's Share...... 4 2.3 Other Tender Offers ...... 5

3. TERMS AND CONDITIONS OF THE TENDER OFFER ...... 6

3.1 Object of the Tender Offer ...... 6 3.2 Offer Price ...... 6 3.3 Offer Period ...... 6 3.4 Conditions to Completion ...... 6 3.5 Obligation to Increase the Offer Price or to Pay Compensation ...... 7 3.6 Acceptance Procedure ...... 7 3.7 Withdrawal Right ...... 8 3.8 Announcement of the Result of the Tender Offer ...... 9 3.9 Completion of the Tender Offer, Payment and Settlement ...... 9 3.10 Transfer of Title ...... 9 3.11 Transfer Tax and Other Payments ...... 10 3.12 Other Matters ...... 10

4. INFORMATION ON DNA ...... 11

4.1 DNA in Brief ...... 11 4.2 Shares and Share Capital ...... 11 4.3 Ownership Structure ...... 12 4.4 Treasury Shares...... 12 4.5 Option Rights and Special Rights Entitling to Shares...... 12 4.6 Authorizations ...... 12 4.7 Shareholder Agreements and Other Agreements Concerning the Use of Voting Rights ...... 13 4.8 Board of Directors, Managing Director and Auditor ...... 13 4.9 Articles of Association ...... 14 4.10 Business Results, Financial Position and Future Outlook ...... 14

5. INFORMATION ON THE OFFEROR ...... 15

5.1 The Offeror in Brief ...... 15 5.2 Persons related to the Offeror as Stipulated in Chapter 11, Section 5 of the SMA ...... 15 5.3 Company's Ownership in the Offeror ...... 15

vii ANNEXES

ANNEX A FINANCIAL STATEMENTS OF DNA PLC A1

The financial statements of DNA Plc for the financial year ended 31 December 2018 in this Annex A in the form published by the Company. The Offeror does not accept any responsibility for such information except for the accurate restatement of such information herein.

ANNEX B INTERIM REPORT OF DNA PLC B1

The interim report of DNA Plc for the six months ended 30 June 2019 has been included in this Annex B in the form published by the Company. The Offeror does not accept any responsibility for such information except for the accurate restatement of such information herein.

ANNEX C ARTICLES OF ASSOCIATION OF DNA PLC C1

The English language version of the articles of association of DNA Plc has been included in this Annex C in the form published on the Company's website on the date of this Tender Offer Document. The Offeror does not accept any responsibility for such information except for the accurate restatement of such information herein.

viii 1. BACKGROUND, OBJECTIVES AND EFFECTS OF THE TENDER OFFER

1.1 Background to the Tender Offer

Telenor is a global telecom operator, with 181 million customers and strong positions in nine markets across Scandinavia and Asia, leveraging on more than 160 years of proud history. Telenor provides tele, data and media communication services alongside with substantial activities in subsidiaries and joint venture operations across Scandinavia and Asia. Telenor is committed to responsible business conduct, driven by its purpose to connect its customer to what matters most and by the ambition of empowering societies. In 2018, Telenor reported revenues of NOK 110 billion (approximately EUR 11.5 billion) and EBITDA of NOK 42 billion (approximately EUR 4.4 billion). Telenor is headquartered in Fornebu, Norway. Telenor is stock-listed on the Oslo Stock Exchange (Oslo Børs ASA) under the trading code "TEL", and has currently a market capitalization of around NOK 260 billion (approximately EUR 26 billion).

The Offeror is a limited liability company incorporated under the laws of Finland. The Offeror is a wholly-owned indirect subsidiary of Telenor. The Offeror has been incorporated for the purpose of functioning as a holding company for Telenor's holding in DNA.

DNA, a Finnish public limited company headquartered in Helsinki, Finland, is an integrated fixed and mobile telecom operator with a solid market position in the fastest growing mobile market in Europe. DNA is the third largest mobile operator in Finland, with 2.9 million subscribers and 28% market share. In addition, DNA is the second largest fixed broadband provider and the largest cable TV provider in Finland. In 2018, DNA reported revenues of EUR 912 million, EBITDA of EUR 285 million, and operating free cash flow of EUR 151 million. DNA employs approximately 1,600 telecommunication professionals. The shares in DNA are listed on the official list of Nasdaq Helsinki under the trading code "DNA".

Telenor has on 9 April 2019 entered into separate agreements with Finda Telecoms Oy and PHP Holding Oy to acquire the 37,385,454 shares in DNA held by Finda Telecoms Oy and the 34,105,827 shares in DNA held by PHP Holding Oy at that time (the "SPAs"). Completion of the SPAs was subject to certain conditions, including approval by general meetings of the seller entities and required regulatory approvals. Following completion of all conditions to completion under the SPAs on 19 August 2019, the Offeror has on 21 August 2019 acquired altogether 71,491,281 shares in DNA, corresponding to 54.04% of all shares and votes in DNA. As a result of the acquisition of the shares under the SPAs, the Offeror is obliged to launch a mandatory public tender offer in accordance with Chapter 11, Section 19 of the SMA for all Shares and any securities entitling to shares in DNA. As of the date of this Tender Offer Document, to the Offeror's knowledge there are no issued and outstanding securities entitling to shares in DNA.

At the date of this Tender Offer Document, the Board of Directors of DNA has not given its statement in accordance with Chapter 11, Section 13 of the SMA.

1.2 Effects on DNA's Operations, Assets and Personnel

Operations and Assets

DNA will continue its operations and the completion of the Tender Offer will have no immediate material effect on the operations, location of offices or assets of DNA. The acquisition will not affect services provided by DNA.

Personnel

The Tender Offer will have no immediate material effect on the personnel or management of DNA as Telenor does not have any other telecom business in Finland. The Offeror believes that its ownership in DNA will have a positive influence on the personnel of DNA by creating broader career opportunities within a large global group. Telenor has a business model where market operations are primarily led by local management.

To the Offeror's knowledge, no compensation or remuneration will be granted to the management or the members of the Board of Directors of DNA in return for execution of the Tender Offer.

1 1.3 Strategic Future Plans

The Offeror and Telenor see potential for DNA to continue to grow through its focus on customer satisfaction, strengthening the corporate business segment, and leveraging on Telenor's global scale and strong position in the Nordic region. Over time, the acquisition of DNA is expected to generate synergies within procurement, roaming, and best practice sharing.

Furthermore, the acquisition of DNA is executing Telenor's strategic agenda, focusing on modernisation and value creation within core telecom in the Nordics and Asia, while continuing to deliver on Telenor's priorities and shareholder remuneration policy. The acquisition of DNA enables Telenor to consolidate its position in the Nordics and balance its business portfolio.

Telenor's interest in DNA as a majority shareholder is focused on driving shareholder value in a long-term perspective. DNA has been successful in building on its recognized brand, products, customer service as well as highly performing sales and marketing. Telenor foresees long term potential in DNA’s business, however, Telenor also recognizes that strategic efforts may require significant investments in the business and results from such strategic efforts may take considerable time to materialize.

Telenor considers that the dividend distribution level of DNA as a listed company has been a result of a strong balance sheet and limited investments or acquisitions of significant size. However, the Offeror considers that dividend payout cannot continue to be in excess of net income and free cash flow. Telenor aims to ensure a healthy balance sheet and predictable dividend payouts based on underlying cash flow development. The ordinary dividend should be seen as the key element in the DNA shareholder remuneration while extraordinary dividends could occasionally be applied but should not be expected as part of the regular annual payout.

The Offeror intends to request an extraordinary general meeting of DNA to be convened to take place as soon as practicable in order to change the composition of the Board of Directors of DNA to reflect the Offeror's majority shareholding in DNA.

1.4 Compliance with the Recommendation Referred to in Chapter 11, Section 28 of the SMA

The Offeror has undertaken to comply with the Helsinki Takeover Code published by the Securities Market Association.

1.5 Statements Concerning the Tender Offer

At the date of this Tender Offer Document, the Board of Directors of DNA has not given its statement in accordance with Chapter 11, Section 13 of the SMA. The statement to be issued by the Board of Directors of DNA concerning the Tender Offer will be attached to this Tender Offer Document after its issuance.

1.6 Effect's on the Offeror's Operations, Assets and Personnel

Other than as a result of the payment of the Offer Price, the completion of the Tender Offer is not expected to have any immediate material effects on the operations, personnel, management, location of offices or assets of the Offeror.

1.7 Financing of the Tender Offer

The Offeror has sufficient financing for the Tender Offer through access to cash reserves and financing facilities of the Telenor group. The financing arrangements in connection with the Tender Offer are not expected to affect the operations or obligations of DNA.

1.8 Offeror's Future Plans with respect to DNA Shares

Mandatory Public Tender Offer

This Tender Offer is a mandatory public tender offer in accordance with Chapter 11, Section 19 of the SMA, pursuant to which a shareholder whose holding exceeds the threshold of 30% or 50% of the total voting rights attached to the shares in a publicly traded company, is obliged to make a tender offer for all the remaining shares and securities entitling to shares in the target company.

The Offeror has exceeded the thresholds of 30% and 50% of the total voting rights in DNA on 21 August 2019, following completion of the SPAs, and the Offeror currently holds 54.04% of all of shares and votes in DNA. As of the

2 date of this Tender Offer Document, to the Offeror's knowledge there are no issued and outstanding securities entitling to shares in DNA. Through this Tender Offer, the Offeror fulfils its obligations pursuant to Chapter 11, Section 19 of the SMA.

Redemption under the Companies Act

According to Chapter 18 of the Finnish Companies Act (624/2006, as amended) (the "Companies Act"), a shareholder holding more than 90% of the total number of shares in a company and the total voting rights attached thereto is entitled to redeem all issued and outstanding shares in the target company. A minority shareholder whose shares the majority shareholder is entitled to redeem has the right to demand redemption of his/her/its shares. The mandatory redemption procedure is set forth in more detail in the Companies Act.

Should the Offeror obtain more than 90% of the total number of shares in DNA and the total voting rights attached thereto, the Offeror will make a redemption claim to the remaining minority shareholders of DNA in accordance with the Companies Act in order to redeem all the remaining Shares (the "Squeeze-Out").

Pursuant to the Companies Act, a shareholder that holds more than 2/3 of the shares and voting rights attached to the shares in a company has sufficient voting rights to decide upon the merger of a company into another company. Should the Offeror, following completion of the Tender Offer, hold more than 2/3 but not more than 90% of the total number of shares in DNA and the total voting rights attached thereto, it is possible that DNA could be subject to certain corporate transactions, including a merger of DNA into an unlisted Finnish company. However, the Offeror has not taken any resolutions regarding such transactions.

DNA's Shares on Nasdaq Helsinki

The Tender Offer is made for all of the issued and outstanding shares in DNA that are not held by DNA or its group companies or by the Offeror or its group companies. Should the Offeror obtain more than 90% of the total number of shares in DNA and the total voting rights attached thereto, the Offeror will initiate a Squeeze-Out for the remaining shares and thereafter DNA will apply for delisting of its shares from Nasdaq Helsinki.

Subject to the outcome of the Tender Offer, the Offeror is also prepared for any scenario in which DNA remains listed on Nasdaq Helsinki and the Offeror is the largest shareholder with not more than 90% of the total number of shares in DNA and the total voting rights attached thereto. The Offeror does not intend to acquire shares in DNA at a price exceeding the Offer Price.

1.9 Regulatory Approvals

The completion of the Tender Offer is not subject to any conditions. Telenor has obtained all required regulatory approvals for the acquisition of all or a majority of all shares in DNA, including through the Tender Offer, prior to completion of the SPAs.

1.10 Fees to Advisors

SEB serves as the financial advisor to the Offeror in connection with the Tender Offer and as the Arranger of the Tender Offer and Barclays serves as the financial advisor to the Offeror in connection with the Tender Offer. Dittmar & Indrenius Attorneys Ltd serves as the legal advisor to the Offeror in connection with the Tender Offer. The Offeror has undertaken to pay fees to SEB in connection with the Tender Offer that are dependent on the completion/acceptance rate of the Tender Offer in the aggregate amount of approximately EUR 0.3 million.

1.11 Applicable Law

The Tender Offer and this Tender Offer Document shall be governed by Finnish law and all disputes relating thereto shall be finally settled by Finnish courts of competent jurisdiction.

3 2. INFORMATION ON THE GROUNDS FOR PRICING OF THE TENDER OFFER

2.1 Grounds for Determining the Offer Price

The Offer Price is EUR 20.90 in cash for each Share validly tendered in the Tender Offer.

According to Chapter 11, Section 23 of the SMA, the starting point in determining the consideration to be offered in a mandatory public tender offer shall be the highest price paid for the securities subject to the tender offer by the offeror or by a person, organization or foundation related to the offeror as stipulated in Chapter 11, Section 5 of the SMA, during a period of six months preceding the obligation to launch the tender offer.

Telenor has on 9 April 2019 (the "Transaction Announcement Date") entered into the SPAs with Finda Telecoms Oy and PHP Holding Oy to acquire the 37,385,454 shares in DNA held by Finda Telecoms Oy and the 34,105,827 shares in DNA held by PHP Holding Oy at that time. Completion of the SPAs was subject to certain conditions, including approval by general meetings of the seller entities and required regulatory approvals. Following completion of all conditions to completion under the SPAs on 19 August 2019, the Offeror has on 21 August 2019 acquired altogether 71,491,281 shares in DNA, corresponding to 54.04% of all of shares and votes in DNA, for a price of EUR 20.90 per share. Prior to the acquisition of such shares in DNA from Finda Telecoms Oy and PHP Holding Oy, the Offeror did not hold any shares in DNA and neither the Offeror nor any other party referred to in Chapter 11, Section 5 of the SMA has during the six-month period preceding the announcement of the obligation to launch the Tender Offer acquired any Shares in the Company in public trading or otherwise.

2.2 Trading Prices and Price Development of DNA's Share

The chart below presents the price development of the Shares on Nasdaq Helsinki and the trading volume of the Shares during the last three (3) years preceding the announcement of the Offeror's obligation to launch the Tender Offer, i.e., between 30 November 2016 and 20 August 2019 as the Shares were listed and commenced trading on Nasdaq Helsinki on 30 November 2016.

The closing price per Share was EUR 19.46 on 8 April 2019, the last trading day preceding the Transaction Announcement Date. The volume-weighted average trading price of the Share on Nasdaq Helsinki during the three- month period prior to the Transaction Announcement Date, i.e., from 8 January 2019 to 8 April 2019, was EUR 17.23 when adjusted for cash dividend of EUR 1.10 prior to the ex-dividend date of 29 March 2019 for the dividend resolved upon at the 2019 annual general meeting of DNA. The volume-weighted average trading price of the Share on Nasdaq Helsinki during the three-month period prior to the Transaction Announcement Date, i.e. from 8 January 2019 to 8

4 April 2019, was EUR 18.20 without the abovementioned adjustment for the cash dividend of EUR 1.10 prior to the ex- dividend date.

The closing price per Share was EUR 20.92 on 20 August 2019, the last trading day prior to the announcement of the Offeror's obligation to launch the Tender Offer. The volume-weighted average trading price of the Shares on Nasdaq Helsinki during the three-month period prior to the announcement of the Offeror's obligation to launch the Tender Offer, i.e., from 20 May 2019 to 20 August 2019, was EUR 21.00.

The Offer Price represents a premium of approximately 7.4% compared to the closing price of the DNA shares on Nasdaq Helsinki the last trading day prior to the Transaction Announcement Date, a premium of approximately 21.3% compared to the volume-weighted average trading price of the DNA shares during the three-month period preceding the Transaction Announcement Date, when adjusted for cash dividend of EUR 1.10 prior to the ex-dividend date of 29 March 2019 for the dividend resolved upon at the 2019 annual general meeting of DNA and a premium of approximately 14.8% compared to the volume-weighted average trading price of the DNA shares during the three- month period preceding the Transaction Announcement Date, without the abovementioned adjustment for cash dividend of EUR 1.10 prior to the ex-dividend date.

The table below presents the quarterly trading prices and trading volumes of the Shares during the last three (3) years preceding the Tender Offer.

Closing share price during the Trading volume during the period (EUR) period Time period Average High Low Shares Euros 2016 Q4 (from 30 November) 10.07 10.15 9.90 56,981,069 575,140,450 2017 Q1 11.42 12.18 10.18 9,568,551 108,188,488 Q2 12.38 14.34 11.05 9,292,917 118,110,311 Q3 14.89 15.59 13.83 8,282,298 123,350,294 Q4 14.79 15.65 14.25 52,407,032 756,212,386 2018 Q1 16.82 18.34 14.87 14,841,361 248,625,547 Q2 19.43 20.64 17.42 20,677,199 398,944,313 Q3 18.56 21.98 16.54 14,345,082 263,753,823 Q4 17.72 19.85 16.26 12,514,958 223,640,880 2019 Q1 18.18 19.60 16.61 12,582,770 227,242,784 Q2 20.90 21.44 18.91 15,673,211 327,716,891 Q3 (until 20 August) 20.97 21.04 20.92 4,384,066 92,000,060

2.3 Other Tender Offers

To the Offeror's knowledge, no public tender offer for shares in DNA or securities entitling to shares in DNA has been made by any third party during the twelve (12) months preceding the announcement of the Offeror's obligation to launch the Tender Offer.

5 3. TERMS AND CONDITIONS OF THE TENDER OFFER

3.1 Object of the Tender Offer

Telenor Finland Holding Oy (the "Offeror") has on 21 August 2019 acquired 71,491,281 shares in DNA Plc (the "Company" or "DNA"), corresponding to 54.04% of all shares and votes in DNA. As a result of the acquisition, the Offeror is obliged to launch a mandatory public tender offer in accordance with Chapter 11, Section 19 of the Finnish Securities Markets Act (746/2012, as amended) (the "SMA") for all other shares and any securities entitling to shares in DNA. In accordance with Chapter 11 of the SMA and subject to the terms and conditions set fort in this tender offer document (the "Tender Offer Document"), the Offeror hereby offers to purchase all 60,690,903 issued and outstanding shares in DNA, that are not held by DNA or its group companies or by the Offeror or its group companies (the "Shares" or individually a "Share") (the "Tender Offer"). As of the date of this Tender Offer Document, to the Offeror's knowledge there are no issued and outstanding securities entitling to shares in DNA.

3.2 Offer Price

The Offeror announced its obligation to launch the Tender Offer on 21 August 2019. The offer price for each Share validly tendered in accordance with the terms and conditions of the Tender Offer is EUR 20.90 in cash (the "Offer Price").

The Offer Price has been determined in accordance with Chapter 11, Section 23 of the SMA.

Should DNA change the number of shares issued and outstanding on the date of this Offer Document as a result of a new share issue, reclassification, share split (including a reverse split) or any other similar transaction with dilutive effect, or should DNA distribute a dividend or otherwise distribute funds or any other assets to its shareholders, or if a record date with respect to any of the foregoing shall occur prior to the Completion Date (as defined below), the Offer Price shall be adjusted accordingly on a euro-for-euro basis on the gross value declared or made, before the deduction of any withholding tax and/or any other applicable taxes.

3.3 Offer Period

The acceptance period for the Tender Offer (the "Offer Period") commences on 29 August 2019 at 9:00 a.m. (Finnish time) and expires on 26 September 2019 at 4:00 p.m. (Finnish time) (the "Initial Offer Period"), unless the Offer Period is extended as set forth below. The Offer Period may be extended by the Offeror (i) at any time during the Initial Offer Period, (ii) at any time during an extended Offer Period, and (iii) in case of any competing offer as referred to in Chapter 11, Section 17 of the SMA.

The Offeror will announce a possible extension of the Offer Period from the Initial Offer Period through a stock exchange release at the latest on 26 September 2019. The Offeror will announce a possible extension of an already extended Offer Period at the latest on the expiry date of such extended Offer Period. The duration of any possible extension of the Offer Period, including an extension of an already extended Offer Period, shall be at least two (2) weeks from the date of the announcement by the Offeror concerning such extension.

If the Offeror extends the Offer Period from the Initial Offer Period, the Offer Period will expire on the date and at the time until which the Offeror extends the Offer Period unless the extended Offer Period is further extended or discontinued in accordance with the terms and conditions of the Tender Offer. The maximum duration of the Offer Period (including any extension of the Offer Period) is ten (10) weeks. However, the Offer Period may be extended beyond ten (10) weeks due to a special reason in accordance with Chapter 11, Section 12 of the SMA, provided that the business operations of the target company are not hindered for longer than reasonable. The date of the expiry of the extended Offer Period will in such case be published at least two (2) weeks before such expiry.

The Offeror may discontinue any extended Offer Period at any time. Should the Offeror discontinue the extended Offer Period, the Offeror will announce its decision thereof through a stock exchange release as soon as possible after such decision has been made and, in any case, at least two (2) weeks before the expiry of the extended Offer Period to be discontinued. If the Offeror discontinues the extended Offer Period, the extended Offer Period will expire on such earlier date and at the time indicated in such announcement made by the Offeror.

3.4 Conditions to Completion

As the Tender Offer is a mandatory public tender offer, the Tender Offer may be conditional only with regard to the necessary decisions by the authorities to be obtained, as set out in Chapter 11, Section 15 of the SMA. Telenor has

6 obtained all required regulatory approvals for the acquisition of all or a majority of all shares in DNA, including through the Tender Offer, prior to completion of the SPAs. Consequently, the Tender Offer is not subject to any conditions.

3.5 Obligation to Increase the Offer Price or to Pay Compensation

The Offeror reserves the right to acquire Shares in public trading on Nasdaq Helsinki or otherwise before, during and/or after the Offer Period (including any extension thereof) or otherwise outside the Tender Offer to the extent permitted by Finnish and any other applicable law.

If the Offeror or any party referred to in Chapter 11, Section 5 of the SMA acquires, before the expiry of the Offer Period, Shares at a higher price than the Offer Price or otherwise on terms that are more favourable than those of the Tender Offer, the Offeror must according to Chapter 11, Section 25, Subsection 1 of the SMA amend the terms and conditions of the Tender Offer to correspond to such acquisition on more favourable terms (obligation to increase the offer price). The Offeror shall then, without delay, announce the triggering of the obligation to increase the offer price and pay, in connection with the completion of the Tender Offer, the difference between the acquisition on more favourable terms and the consideration offered in the Tender Offer to the holders of securities who have accepted the Tender Offer.

If the Offeror or any party referred to in Chapter 11, Section 5 of the SMA acquires, during the nine (9) months following the expiry of the Offer Period, Shares in DNA at a higher price than the Offer Price or otherwise on terms that are more favourable than those of the Tender Offer, the Offeror must according to Chapter 11, Section 25, Subsection 2 of the SMA compensate those holders of securities who have accepted the Tender Offer for the amount equal to the difference between the acquisition on more favourable terms and the consideration offered in the Tender Offer (obligation to compensate). The Offeror shall then, without delay, announce the triggering of the obligation to compensate and pay the difference between the acquisition on more favourable terms and the consideration offered in the Tender Offer within one (1) month after the triggering of the obligation to compensate to the holders of securities who have accepted the Tender Offer.

According to Chapter 11, Section 25, Subsection 5 of the SMA, the obligation to compensate shall, however, not be triggered in case the payment of a higher price than the Offer Price is based on an arbitral award pursuant to the Companies Act, provided that the Offeror or any party referred to in Chapter 11, Section 5 of the SMA has not offered to acquire Shares on terms that are more favourable than those of the Tender Offer prior to or during the arbitral proceedings.

3.6 Acceptance Procedure

The Tender Offer may be accepted by a holder of Share(s) registered during the Offer Period in DNA's shareholders' register (a "Shareholder").

The Tender Offer must be accepted separately for each book-entry account. A Shareholder giving the acceptance must have a cash account with a financial institution operating in Finland or abroad (see also sections "Completion of the Tender Offer, Payment and Settlement" and "Important Information"). A Shareholder may only accept the Tender Offer unconditionally and with respect to all Shares on the book-entry account(s) mentioned in the acceptance form on the date and on the time of the execution of the sale and purchase of the Shares. An acceptance given during the Offer Period is effective also until the end of any extended Offer Period.

Most of the Finnish book-entry account operators are expected to send a notice of the Tender Offer, including instructions related thereto and an acceptance form to such Shareholders who are customers of the account operator and registered in DNA's shareholders' register maintained by Euroclear Finland Ltd ("Euroclear"). Shareholders who have not received such instructions or an acceptance form from their account operator should primarily contact their account operator. Secondarily, the Shareholders can contact SEB by sending an email to [email protected], where the Shareholders can receive information for submitting their acceptance.

A DNA shareholder whose holding(s) of Shares are registered in the name of a nominee and who wishes to accept the Tender Offer shall provide their acceptance in accordance with the instructions given by the administrator managing the nominee registration. The Offeror will not send an acceptance form or any other documents related to the Tender Offer to such DNA shareholders.

7 All Shareholders who accept the Tender Offer must give their acceptance to the account operator that manages their book-entry account according to the instructions and within the time limit given by the account operator. The acceptance shall be submitted so that it will be received within the Offer Period (including any extension or suspension thereof), however, in accordance with instructions given by the account operator. An account operator may request a Shareholder to deliver the acceptance prior to the expiry of the Offer Period.

Shares which are pledged or subject to a transfer restriction may only be tendered with the consent of the relevant pledgee or beneficiary of the transfer restriction. The obtaining of such consent shall be the responsibility of the relevant Shareholder. The consent must be delivered to the account operator in writing.

The method of delivery of acceptance forms is at the Shareholder's option and risk, and the delivery will be deemed made only when actually received by the relevant account operator. The Offeror reserves the right to reject any acceptance given in an incorrect or incomplete manner. The Offeror may also reject any partial tender of the Shares per book-entry account.

Those Shareholders who have validly accepted the Tender Offer are not permitted to sell or otherwise dispose of the tendered Shares. By accepting the Tender Offer the Shareholders authorise their account operator to enter into their book-entry account transfer restrictions or a sales reservation with respect to the Shares after the Shareholders have delivered the acceptance form with respect to the Shares. Furthermore, the Shareholders who accept the Tender Offer authorise their account operator to perform necessary entries and undertake any other measures needed for the technical execution of the Tender Offer, and to sell all Shares held by the Shareholder at the time of the execution of the transaction to the Offeror in accordance with the terms and conditions of the Tender Offer. In connection with the completion trades or the clearing of the Tender Offer, the sales reservation or the transfer restriction on the right of disposal will be revoked and a cash consideration will be paid to the Shareholder.

Important Information regarding NID and LEI

According to Directive 2014/65/ EU (MiFID II) of the European Parliament and of the Council, all investors must have a global identification code from 3 January 2018 in order to carry out a securities transaction. These requirements require legal entities to apply for registration of a Legal Entity Identifier ("LEI") code, and natural persons need to find their NID (National ID or National Client Identifier) to accept the Tender Offer. Note that it is the legal person's legal status that determines whether a LEI code or NID number is required and that SEB may be prevented from performing the transaction to the person if LEI or NID number (as applicable) is not provided. Legal persons who need to obtain a LEI code can contact one of the suppliers available on the market. Instructions for the global LEI system can be found on the following website: www.gleif.org/en/about-lei/how-to-getan-lei-find-lei-issuing-organizations. Those who intend to accept the Tender Offer are encouraged to apply for registration of a LEI code (legal persons) or to find out their NID number (physical persons) in good time, as this information is required on the application form at the time of submission.

Information regarding Processing of Personal Data

Those who accept the Tender Offer will submit personal data, such as name, address and social security number, to SEB, who is controller for the processing. Personal data provided to SEB will be processed in data systems to the extent required to administer the Tender Offer. Personal data obtained from sources other than the customer may also be processed. Personal data may also be processed in the data systems of companies with which SEB cooperates. Address details may be obtained by SEB through an automatic procedure executed by Euroclear. For additional information regarding SEB's processing of personal data and your rights, please see SEB's website (www.sebgroup.com/site- assistance/privacy-policy).

3.7 Withdrawal Right

The acceptance of the Tender Offer is binding, and it may not be withdrawn, unless otherwise provided under applicable law. In such situation, the proper withdrawal of the acceptance requires that a written notice of withdrawal is submitted to the same account operator to whom the acceptance concerning the Shares in question was submitted. If an acceptance concerning the Shares has been submitted to SEB, also the notice of withdrawal shall be submitted to SEB. In case of holdings that are registered in the name of a nominee, the Shareholder shall instruct the respective nominee to submit the notice of withdrawal.

If a Shareholder properly withdraws its acceptance of the Tender Offer, any transfer restriction or sales reservation registered on the tendered Shares on the relevant book-entry account will be removed as soon as possible and within

8 approximately three (3) Finnish banking days following the receipt of a notice of withdrawal in accordance with the terms and conditions of the Tender Offer.

A Shareholder who has withdrawn its acceptance of the Tender Offer may renew the acceptance within the Offer Period (including any extension or suspension thereof) in accordance with the procedure described in section "Acceptance Procedure".

A Shareholder who withdraws its acceptance shall be liable to pay any fees which the account operator managing the relevant book-entry account or the nominee may charge for withdrawals.

3.8 Announcement of the Result of the Tender Offer

The Offeror will announce the preliminary result of the Tender Offer on or about the first (1st) Finnish banking day following the expiry of the Offer Period (including any extension or suspension thereof). The Offeror will announce the final result of the Tender Offer on or about the third (3rd) Finnish banking day following the expiry of the Offer Period (including any extension or suspension thereof). In the announcement of the final result the Offeror will confirm the percentage of the Shares which have been validly tendered and not validly withdrawn.

If the Offer Period is extended from the Initial Offer Period, the Offeror will on or about 27 September 2019 announce the preliminary percentage of the Shares which have been validly tendered (and not validly withdrawn) during the Initial Offer Period and the final percentage of such Shares on or about 1 October 2019.

In the event of an extension of an already extended Offer Period, the Offeror will on or about the first (1st) Finnish banking day following the expiry of such extended Offer Period announce the preliminary percentage of the Shares which have been validly tendered (and not validly withdrawn) during such extended Offer Period and on or about the third (3rd) Finnish banking day following the expiry such extended Offer Period the final percentage of such Shares.

3.9 Completion of the Tender Offer, Payment and Settlement

The sale and purchase of the Shares will be executed with respect to all Shareholders who have validly accepted the Tender Offer by 26 September 2019 (and not validly withdrawn their acceptances) no later than on 2 October 2019 (the "Completion Date") and such completion trades will be settled on or about the Completion Date (the "Clearing Date"). If possible, the completion trades will be executed on Nasdaq Helsinki. Otherwise, the completion trades will be executed outside Nasdaq Helsinki.

In the event of an extended Offer Period, the Offeror shall in connection with the announcement thereof announce the terms of payment and settlement for the Shares tendered during such extended Offer Period. The completion trades of the Shares validly tendered in accordance with the terms and conditions of the Tender Offer during an extended Offer Period shall, however, be executed at least within two-week intervals.

The Offer Price will be paid on the Clearing Date to a Shareholder who has validly accepted the Tender Offer, into the management account of the Shareholder's book-entry account or, in the case of Shareholders whose holdings are registered in the name of a nominee, into the bank account specified by the custodian or nominee. In any event, the Offer Price will not be paid to a bank account located in Canada, Japan, Australia, South Africa or Hong Kong or any other jurisdiction where making the Tender Offer would be prohibited by applicable law (see section "Important Information"), and all guidance from custodians or nominees specifying bank accounts in such jurisdictions will be rejected. Actual time of receipt of the payment by the Shareholder will depend on the schedules for payment transactions between financial institutions and agreement between the holder and account operator, custodian or nominee in each case.

The Offeror reserves the right to postpone the payment of the Offer Price if payment is prevented or suspended due to a force majeure event, but shall immediately effect such payment once the force majeure event preventing or suspending payment is resolved.

3.10 Transfer of Title

Title to the Shares validly tendered and not validly withdrawn in the Tender Offer will pass to the Offeror on the clearing date against payment of the Offer Price by the Offeror to the tendering Shareholder.

9 3.11 Transfer Tax and Other Payments

The Offeror will pay the Finnish transfer tax, if any, relating to the sale and purchase of the Shares in connection with the completion of the Tender Offer.

Fees charged by account operators, asset managers, nominees, or any other person for registering the release of any pledges or other possible restrictions preventing a sale of the relevant Shares, as well as fees relating to a withdrawal of an acceptance of the Tender Offer by a Shareholder in accordance with section "Withdrawal Rights" above, will be borne by each Shareholder. The Offeror shall be responsible for other customary fees relating to book-entry registrations required for the purpose of the Tender Offer, the sale and the purchase of the Shares tendered in the Tender Offer or the payment of the Offer Price.

The receipt of cash pursuant to the Tender Offer by a Shareholder may be a taxable transaction for such Shareholder under applicable tax laws, including those of the country of residence of the Shareholder. Any tax liability arising for a Shareholder from the receipt of cash pursuant to the Tender Offer shall be borne by such Shareholder. Each Shareholder is urged to consult its independent professional adviser regarding the tax consequences of accepting the Tender Offer.

3.12 Other Matters

The Offeror reserves the right to amend the terms and conditions of the Tender Offer in accordance with Chapter 11, Section 15, Subsection 2 of the SMA.

The Offeror in its sole discretion will decide on all other matters relating to the Tender Offer, subject to the requirements of applicable laws.

10 4. INFORMATION ON DNA

All financial and other information presented in this Tender Offer Document concerning DNA has been extracted from, and has been exclusively based upon, the unaudited consolidated interim financial report for the six months ended 30 June 2019 published by DNA, the audited consolidated financial statements of DNA as at and for the financial year ended 31 December 2018, entries in the Finnish Trade Register and other publicly available information. Consequently, the Offeror does not accept responsibility for such information except for the accurate reproduction of such information herein.

4.1 DNA in Brief

DNA is a public limited liability company (business identity code 0592509-6) incorporated under the laws of Finland. The shares in DNA are listed on the official list of Nasdaq Helsinki under the trading code "DNA". The registered domicile of DNA is Helsinki and its address is Läkkisepäntie 21, 00620 Helsinki, Finland. DNA is headquartered in Helsinki, Finland.

DNA is an integrated fixed and mobile telecom operator with a solid market position in the fastest growing mobile market in Europe. The company is the third largest mobile operator in Finland, with 2.9 million subscribers and 28% market share. In addition, DNA is the second largest fixed broadband provider and the largest cable TV provider in Finland. DNA's mission is to provide products and services that make their private and corporate customers' lives simple. As a telecommunications operator, DNA plays an important role in society by providing important communication connections and by enabling digital development. A key element in DNA's strategy is to create the best customer experience with the aim of having the most satisfied customers in Finland. The Company has disclosed plans to launch 5G services during 2019. DNA's customers have already highest data usage in Europe and one of the highest mobile data usage per subscription in the world, and the migration to 5G will enable to support the Company's growth.

In 2018, DNA reported revenues of EUR 912 million, EBITDA of EUR 285 million, and operating free cash flow of EUR 151 million. DNA employs approximately 1,600 telecommunication professionals.

4.2 Shares and Share Capital

On the date of this Tender Offer Document, DNA's share capital entered into the Finnish Trade Register amounted to EUR 72,702,225.65 and the number of shares to 132,303,500. DNA's articles of association do not include any provision on the minimum or maximum amount of share capital or number of shares.

DNA has one class of shares. The shares in DNA are incorporated in the book-entry securities system managed by Euroclear. Each share in DNA entitles its holder to one (1) vote at the general meeting of shareholders of DNA. All shares give equal rights to dividends and other distributions of funds or assets by DNA. DNA's articles of association do not contain provisions or restrictions on voting rights which would deviate from the Companies Act.

DNA's 2019 annual general meeting, held on 28 March 2019, approved the proposal by DNA's Board of Directors to distribute a dividend of EUR 0.70 per share and an extra dividend of EUR 0.40 per share, in total EUR 1.10 per share. The dividend has been paid on 10 April 2019 and does not affect the Offer Price.

11 4.3 Ownership Structure

The following table sets forth the ten largest shareholders of DNA and their shareholdings on 31 July 2019 (ownership percentage calculated based on all shares in DNA), save for the Offeror's shareholding which represents the Offeror's shareholding as per 21 August 2019.

Number of Shareholder % Shares 1. Offeror 71,491,2811 54.04 2. Ilmarinen Mutual Pension Insurance Company 4,614,069 3.49 3. Elo Pension Company 2,269,000 1.71 4. Lohjan Puhelin Oy 2,196,705 1.66 5. Viria Oyj 1,000,000 0.76 6. Mandatum Life Insurance Company Limited 982,381 0.74 7. The State Pension Fund 870,000 0.66 8. Jakobstadsnejdens Telefon Ab 700,800 0.53 9. Evli Finnish Small Cap Fund 440,000 0.33 10. Danske Invest Finnish Institutional Equity Fund 400,000 0.30 Top 10 Total 84,954,236 64.21

Others 47,349,264 35.79

132,303,500 100.00 Total

Nominee registered 36,251,561 27.40

4.4 Treasury Shares

To the knowledge of the Offeror, DNA and its group companies holds on the date of this Tender Offer Document 121,316 shares, representing approximately 0.09% of all shares and votes in DNA.

4.5 Option Rights and Special Rights Entitling to Shares

To the knowledge of the Offeror, DNA has not issued any option rights or special rights entitling to shares. As of the date of this Tender Offer Document, no information regarding such rights has been registered with the Finnish Trade Register.

DNA currently has four long-term incentive plans: Performance Share Plan (PSP), Bridge Plan (BP), Restricted Share Plan (RSP), and from 2019 onwards a matching shares plan for the entire personnel (MSP). The Board of Directors of DNA decides annually on the launch of new earning and saving periods as well as the terms and conditions. The PSP consists of separate share-based plans, that begin annually and have a three-year earning period. In PSP 2019-2021, the performance criteria are based on total shareholder return (TSR) of DNA compared to a peer group and the development of DNA's EBITDA and in PSP 2018-2020 on TSR of DNA compared to a peer group and the development of DNA's cumulative cash flow. The Bridge Plan consists of two three-year share-based plans which each have a one-year earning period and a two-year restriction period. The plans begun in 2017 and 2018. Shares received as a reward cannot be sold during the two-year restriction period. The performance criteria applying to both bridge plans are based on DNA's key strategic objectives during the earning periods. DNA's CEO and the members of the DNA Executive Team are entitled to participate in the matching shares plan for the personnel. Relation to the fixed annual salary: the maximum amount of reward payable under the share-based incentive schemes is limited in such a way that each participant's annual share reward may be a maximum of three times their annual fixed gross salary.

4.6 Authorizations

Authorizations concerning repurchase of the Company's own shares

DNA's annual general meeting held on 28 March 2019 authorized the Board of Directors to decide on repurchase and acceptance as pledge of own shares as follows:

1 The Offeror has on 21 August 2019 acquired the shares from Finda Telecoms Oy (37,385,454 shares) and from PHP Holding Oy (34,105,827 shares), on 31 July 2019 such shares were owned by Finda Telecom Oy and PHP Holding Oy.

A maximum of 4,000,000 of DNA's own shares can be repurchased and/or accepted as pledge using DNA's unrestricted shareholders' equity. The purchase can take place on one or more occasions. The purchase price for the shares is the market price paid for the share at the time of the purchase in trading on a regulated market. Own shares may be repurchased through conventional derivatives, stock lending agreements or other agreements on capital markets, as permitted by law and regulations. The purchase price of own shares, including expenses, shall be covered primarily by the invested unrestricted equity fund and secondarily from retained earnings.

The authorisation grants DNA's Board of Directors the right to decide on the repurchase of shares also in other ways than in proportion to the shareholders' shareholdings (directed repurchase). Own shares can be repurchased to implement acquisitions or other arrangements related to the company's business, to improve the company's capital structure, for the company's incentive schemes or to be otherwise held, disposed of or cancelled.

The authorisation is effective until 30 June 2020.

To the knowledge of the Offeror, DNA's Board of Directors has not exercised the aforementioned authorization.

Authorization concerning issuance of shares, disposal of own shares held by the company and issuance of other special rights entitling to shares

DNA's annual general meeting held on 28 March 2019 authorized the Board of Directors to decide on the issuance of shares, disposal of own shares held by the Company and issuance of special rights entitling to shares as referred to in Chapter 10, Section 1 of the Companies Act.

Based on the authorisation, the Board of Directors is entitled to issue no more than 10,000,000 new shares or treasury shares on one or more occasions. The maximum number of shares that may be issued under the authorisation corresponds to approximately 7.6% of the current total number of DNA shares.

Share issue(s) under the authorisation may take the form of a directed issue in deviation from the shareholders' pre- emptive rights. The authorisation can be used to implement mergers and acquisitions, to develop the company's capital structure, in the company's incentive schemes and for other purposes decided by the Board of Directors. The Board of Directors is authorised to decide on all other terms and conditions related to issuing shares and granting special rights entitling holders to shares.

The authorisation is effective until 30 June 2020.

To the knowledge of the Offeror, DNA's Board of Directors has not exercised the aforementioned authorization.

4.7 Shareholder Agreements and Other Agreements Concerning the Use of Voting Rights

The Offeror is not aware of any such shareholder agreements or other agreements or arrangements relating to the use of voting rights or concerning the ownership in DNA which would have a material impact on the assessment of the Tender Offer.

4.8 Board of Directors, Managing Director and Auditor

Based on the provisions of the Companies Act and DNA's articles of association, responsibility for the supervision and management of DNA is divided between the General Meeting of Shareholders, the Board of Directors and the managing director.

According to DNA's articles of association, the Board of Directors consists of five to nine members. The composition of DNA's Board of Directors as of the date of this Tender Offer Document is as follows:

Pertti Korhonen Chairman Jukka Ottela Member Anu Nissinen Member Kirsi Sormunen Member Tero Ojanperä Member

13 Anni Ronkainen Member Ted Roberts Member The managing director of DNA as of the date of this Tender Offer Document is Jukka Leinonen.

The auditor of DNA as of the date of this Tender Offer Document is Ernst & Young Oy. The principal auditor is Authorised Public Accountant Terhi Mäkinen.

4.9 Articles of Association

An English language version of the articles of association of DNA is attached to this Tender Offer Document as Annex C.

4.10 Business Results, Financial Position and Future Outlook

Business Results and Financial Position

Information on the assets, liabilities and business results of DNA during the financial year ended 31 December 2018 is available in DNA's official financial statements attached to this Tender Offer Document as Annex A.

Information on the assets, liabilities and business results of DNA for the six-month period ended 30 June 2019 is presented in DNA's interim report attached to this Tender Offer Document as Annex B.

Future Outlook

DNA's future outlook has been discussed under "Outlook" on pages 105-106 of DNA's financial statements for 2018 (see Annex A) and on page 20 under "Outlook for 2019" of DNA's interim report for the six-month period ended 30 June 2019 (see Annex B).

5. INFORMATION ON THE OFFEROR

5.1 The Offeror in Brief

The Offeror is a Finnish limited liability company (business identity code 3009547-7) incorporated under the laws of Finland. Telenor owns all shares in the Offeror through its wholly-owned subsidiary Telenor Mobile Holding AS, a limited liability company incorporated under the laws of Norway (registration number 983 940 145). The Offeror's domicile is Helsinki, Finland, and its address is Snarøyveien 30, N-1360 Fornebu, Norway. The Offeror has been incorporated for the purpose of functioning as a holding company for Telenor's holding in DNA. The Offeror does not currently carry on any business and its current sole purpose is to function as a holding company for Telenor's holding in DNA and make the Tender Offer and take any actions necessary for completing the Tender Offer and possibly a subsequent Squeeze-Out under the Companies Act.

Telenor is a public limited liability company incorporated under the laws of Norway (registration number 982 463 718). Telenor's registered address is at Snarøyveien 30, N-1360 Fornebu, Norway. Telenor is a Norwegian multinational telecommunications company with a leading Nordic position in mobile, broadband and TV services, as well as substantial activities in subsidiaries and joint venture operations. For further information, please see section "Background to the Tender Offer" and www.telenor.com.

5.2 Persons related to the Offeror as Stipulated in Chapter 11, Section 5 of the SMA

The parties acting in concert with the Offeror as referred to in Chapter 11, Section 5 of the SMA comprise the Telenor group companies.

At the date of this Tender Offer Document, Telenor indirectly holds, through the Offeror, 71,491,281 shares and votes in DNA. Other than such shares and votes, neither the Offeror, nor any party referred to in Chapter 11, Section 5 of the SMA, holds any shares or voting rights in DNA or has during the six-month period preceding the announcement of the Tender Offer acquired any shares in DNA in public trading or otherwise.

5.3 Company's Ownership in the Offeror

To the knowledge of the Offeror, DNA does not own any shares or securities entitling to shares in the Offeror, Telenor or any entity referred to in Chapter 11, Section 5 of the SMA.

15 ANNEX A

FINANCIAL STATEMENTS OF DNA PLC

BOARD OF DIRECTORS' REPORT AND FINANCIAL STATEMENTS FOR 2018

87 DNA ANNUAL REPORT 2018 INDEX INDEX

90 BOARD OF DIRECTORS' REPORT 114 FINANCIAL STATEMENTS 2018 CONTENTS 152 16 Investments in associates Parent company accounting principles, FAS 90 Operating environment IFRS consolidated financial statements 153 17 Other investments 191 1 Net sales 90 Regulation 116 Consolidated income statement 154 18 Trade and other receivables 191 2 Depreciation, amortisation and 91 Net sales and result 117 Consolidated statement of comprehensive 156 19 Deferred tax assets and liabilities impairment income 93 Cash flow and financial position 158 20 Inventories 192 3 Other operating expenses 118 Consolidated statement of financial position 94 Development per business segment 158 21 Cash and cash equivalents 193 4 Finance income and expense 120 Consolidated statement of cash flows 96 Capital expenditure 159 22 Equity 194 5 Appropriations 122 Consolidated statement of changes in equity 97 Research and product development 160 23 Share-based payments 194 6 Income tax Notes to the consolidated financial 97 Network infrastructure and new 163 24 Employment benefit obligations statements 195 7 Intangible assets and property, technologies 167 25 Provisions plant and equipment 124 1 The Group in brief 98 Personnel 168 26 Borrowings 199 8 Investments 124 2 Accounting principles 99 Management, governance and Significant 169 27 Net debt 200 9 Receivables from Group companies litigation matters 136 3 Financial risk management 170 28 Trade and other payables 201 10 Deferred tax 100 Shares and shareholders 139 4 Segment information 170 29 Fair value of borrowings 201 11 Accruals 102 DNA’s financial objectives and dividend 140 5 Revenue from contracts with policy customers 171 30 Operating lease agreements 202 12 Equity 102 Corporate responsibility 142 6 Other operating income 171 31 Guarantees and contingent 203 13 Provisions liabilities 103 Report on non-financial matters 142 7 Other operating expenses 203 14 Non-current liabilities 172 32 Related party transactions 104 Near-term risks and uncertainties 143 8 Depreciation, amortisation and 204 15 Liabilities to Group companies impairment 174 33 Impact of new and amended 105 Events after the review period 205 16 Accruals standards 144 9 Employment benefit expenses 105 Outlook for 2019 206 17 Pledged assets and contingent 180 34 Events after the review date 144 10 Finance income liabilities 107 Group key figures Parent company financial statements 144 11 Finance expense 207 18 Related party transactions 112 Calculation of key figures 182 Parent company income statement, FAS 145 12 Income tax expense 208 Signatures of the annual report and 184 Parent company balance sheet, FAS financial statements 146 13 Earnings per share 187 Parent company cash flow statement, FAS 210 Auditors’ report 147 14 Property, plant and equipment 189 Notes 148 15 Intangible assets and impairment testing

88 DNA ANNUAL REPORT 2018 89 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT

BOARD OF DIRECTORS’ REPORT

DNA is a Finnish telecommunications group providing xDSL connections with 4G mobile data connections. In in the 900 MHz, 1800 MHz and 2100 MHz bands. The high-quality voice, data and TV services for communi- addition, a growing number of households uses both licences will be valid until the end of 2033. NET SALES, EUR MILLION cation, entertainment and working. DNA is Finland's fi xednetwork and mobile broadband. DNA agreed on interconnection charges with each 1 000 largest cable operator and the leading pay TV provider 914 Use of TV and video services became more versatile. Finnish mobile operator in early 2018. The charges are in both cable and terrestrial networks. Our mission is While traditional TV viewing minutes decreased, the the same between all operators. From the beginning of to provide products and services that make our private 800 use of streaming and on-demand video services contin- December 2018, the charge decreased from 1.25 cents and corporate customers' lives simple. As a telecom- ued to grow. Growth of cable television subscriptions to 0.93 cents per minute. From the beginning of De- 600 munications operator, DNA plays an important role in also continued. More customers are watching HDTV cember 2019, it will decrease to 0.89 cents per minute, society by providing important communication connec- broadcasts, and they also increasingly want to watch and from December 2020, to 0.82 cents per minute. 400 tions and by enabling digital development. content conveniently at a time that works best for The EU’s Regulatory Framework for electronic com- them. munications stipulates that the EU Commission must 200 set a Union-wide mobile termination rate (MTR) for all The comparison fi gures in brackets refer to Both private and public organisations revamped their mobile network operators and a fi xed termination rate 0 2017. For 2018, as required by the IFRS stand- operations by switching their voice communications 2014 2015 2016 2017 2018 (FTR) for voice calls on fi xed networks by the end of ards, the fi nancial tables in the Board of Direc- and customer service to mobile solutions. The rising 2020. These changes have no eff ect on DNA’s outlook tors’ report contain fi gures reported according business use of cloud services increases the demand for 2019 or DNA’s medium-term objectives. to the IFRS 15 and IFRS 9 standards adopted for network capacity and fast fi bre optic connections. on 1 January 2018. As required by IFRS 15, DNA’s M2M subscription base was boosted by building In March 2018, FICORA (as of 1 January 2019, Finnish COMPARABLE EBITDA AND fi gures adjusted are disclosed as if they were automation systems, the energy sector and the Internet Transport and Communications Agency Trafi com) is- COMPARABLE OPERATING RESULT, prepared under 2017 revenue guidance. The of Things (IoT). sued decisions on signifi cant market power (SMP) con- EUR MILLION comparative analysis between periods in the cerning local loop and bitstream markets (M3). They Regulation Board of Directors’ report uses comparable entered into force on 15 June 2018. FICORA started a 300 284 fi gures, where the 2018 fi gures are disclosed The European Electronic Communications Code was market analysis on the wholesale markets for television as if they were prepared under 2017 revenue fi nalised by EU institutions in December 2018. The new and radio services (M18) towards the end of 2018. The 250 guidance. In the fi nancial statements, the 2018 package of directives will mostly be applied to national analysis is performed to assess whether obligations fi gures are reported according to the IFRS 15 legislation by the end of 2020, except for the cap on need to be imposed on signifi cant market powers 200 and IFRS 9 standards. The reference period the cost of intra-EU mobile calls and texts, which will (SMP) to ensure the market can function properly. 150 134 2017 is disclosed under 2017 guidance. For be applied as of 15 May 2019. The reform will have an Changes related to regulation and decisions of authori- more information on the impact of the stand- eff ect on areas such as market regulation, spectrum ties may have signifi cant impacts on DNA’s business. 100 ards, please see note 33. management and use of spectrum bands, universal service obligations, regulation of electronic communi- Net sales and result 50 cation services as well as consumer protection. Net sales Operating environment 2018 The Finnish Parliament approved the national data pro- 0 DNA’s net sales increased and totalled EUR 913.5 The Finnish economy is on the growth path and both tection law in December. It complements EU’s General 2014 2015 2016 2017 2018 million (886.1 million). The positive development was consumer and business confi dence remained good. Data Protection Regulation (GDPR) and entered into Comparable EBITDA fuelled by the growth of mobile service revenue, which Competition remained intense throughout the year, in force on 1 January 2019. Comparable operating result was boosted in particular by the growth of DNA’s mobile communication services in particular. GDPR will be complemented by ePrivacy regulation. subscription base and customers switching to faster The use of mobile data continued to grow, boosted by EU institutions continued to process the draft ePriva- 4G subscriptions. Mobile device sales were up 18.1% increased adoption of smart phones, tablets and other cy regulation in the review period. The regulation will year-on-year. Internet-connected devices as well as the growing de- increase the protection of people’s privacy and per- EARNINGS PER SHARE, € In 2018, 75.2% (74.3%) of net sales was generated by mand for high-speed 4G subscriptions. Customers are sonal data in electronic communications. It proposes 0,8 consumer business and 24.8% (25.7%) by corporate 0.74 prepared to pay more for faster 4G subscriptions. extending regulation so that it applies to all electronic 0.71 business. communications (e.g. instant messaging applications) 0,7 Most of the phones sold in the market were 4G com- and suggests changes to the basis of processing traffi c Result 0,6 patible smart phones. DNA’s smart phone penetration, 0.51 data, cookies and electronic direct marketing. or the share of smart phones in the subscription base, EBITDA increased and was EUR 283.6 million (271.8 0,5 million). The EBITDA percentage of net sales was 31.0% increased and was 77.4% at the end of 2018. Voice and In October 2018, DNA won the 5G frequency band it 0,3 SMS traffi c continues to fall steadily in Finland. pursued in the auction of the 3.5 GHz band organised (30.7%). The increase was fuelled by growth in mobile by the Finnish Communications Regulatory Author- service revenue and improved operational effi ciency. 0,2 A clear trend in Finland right now is the migration of ity (FICORA) for a price of EUR 21 million. DNA’s 5G Operating result increased and was EUR 133.8 million xDSL subscribers to considerably faster fi xed cable or 0,1 licence entered into force in January 2019. In Decem- (123.5 million). fi bre optic broadband subscriptions or replacement of 0 ber, the Government renewed DNA’s existing licences 2016 2017 2018

90 DNA ANNUAL REPORT 2018 91 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT

Operating result as a percentage of net sales was 14.6% (13.9%). Comparable operating result amounted FIXED-NETWORK SUBSCRIPTIONS CONSOLIDATED KEY FIGURES to EUR 133.8 million (126.6 million). The comparability

1,152,000 of operating result in the reference period was aff ected 1,200,000 by an item of EUR 3.1 million related to impairment of 1-12/2018 1-12/2018 1-12/2017 data systems. 1,000,000 EUR million Reported Adjusted* Reported Change-%

Financial income and expenses amounted to EUR 11.2 800,000 Net sales 911.8 913.5 886.1 3.1 million (9.4 million). Income tax for the period was EUR 600,000 24.5 million (21.1 million). The eff ective tax rate for the EBITDA 284.9 283.6 271.8 4.4 period was 20.0% (18.5%). The net result for the year 400,000 increased and was EUR 98.1 million (93.1 million). Earn- % of net sales 31.2 31.0 30.7 ings per share came to EUR 0.74 (0.71). 200,000 Operating result, EBIT 138.9 133.8 123.5 8.3 Key operative indicators 0 2014 2015 2016 2017 2018 % of net sales 15.2 14.6 13.9 DNA’s mobile subscription base grew by 66,000 Fixed voice subscriptions from the end of the reference year and Comparable operating result, EBIT** 138.9 133.8 126.6 5.7 fi xed-network subscription base increased by 22,000 Cable TV year-on-year. Fixed broadband % of net sales 15.2 14.6 14.3

In the January-December period, ARPU increased 2.3% Net result for the period 102.2 98.1 93.1 5.4 and was EUR 18.8 (18.4). In the January-December period, DNA’s customer CHURN rate was 16.2%, which * Adjusted fi gures are disclosed as prepared under 2017 revenue guidance and do not currently incorporate the impact from the adoption of IFRS is lower than a year ago (18.3%). This was due to high 15 as of 1 January 2018. customer satisfaction and DNA’s ability to react quickly MOBILE COMMUNICATION **Group key fi gures to competitors’ campaigns. SUBSCRIPTIONS (VOICE AND MOBILE BROADBAND), PCS. 3,000,000 2,877,000 KEY OPERATIVE INDICATORS 2,500,000

2,000,000 1-12/2018 1-12/2018 1-12/2017 1,500,000 Reported Adjusted* Reported Change-%

1,000,000 Number of mobile communication network 2,877,000 2,811,000 2.3

500,000 subscriptions at end of period

0 - Revenue per user (ARPU), EUR 18.7 18.8 18.4 2.3 2014 2015 2016 2017 2018 - Customer CHURN rate, % 16.2 18.3

Number of fi xed line subscriptions at end 1,152,000 1,130,000 1.9 of period

*Adjusted fi gures are disclosed as prepared under 2017 revenue guidance and do not currently incorporate the impact from the adoption of IFRS 15 NET DEBT/EBITDA, % as of 1 January 2018.

2.5

2.0 DNA’s financial objective is to keep net 1.5 debt/EBITDA 1.34 at less than 2.0

1.0

0.5

0 2014 2015 2016 2017 2018

92 DNA ANNUAL REPORT 2018 93 DNA ANNUAL REPORT 2018 DEVELOPMENT PER BUSINESS BOARD OF DIRECTORS’ REPORT SEGMENT

Cash fl ow and financial position The Group’s liquid assets amounted to EUR 22.7 million Consumer business The EBITDA percentage of net sales was 31.7% (30.3%). (23.6 million). Net debt increased and was EUR 379.3 Consumer business operating result increased and was Cash fl ow after investing activities was EUR 63.4 Consumer business net sales increased and were EUR million (304.3 million). The Group’s liquid assets and EUR 118.7 million (104.6 million), or 17.3% of consumer million (107.7 million). Cash fl ow was impacted mainly 687.1 million (658.7 million). Net sales were driven by undrawn committed credit limits amounted in total to business net sales (15.9%). by growth in working capital due to decrease in trade EUR 187.7 million (188.6 million). In April, a dividend and the increasing demand for mobile services as well as payables as well as due to fi nancing arrangements of a There were no items aff ecting comparability in the re- a capital payment from the reserve for invested unre- good mobile device sales. release of new bond and partial repurchase of existing view or reference period. Depreciation of EUR 98.8 mil- stricted equity was distributed for the fi nancial year EBITDA increased and was EUR 217.5 million (199.8 notes. lion (95.2 million) was allocated to consumer business. 2017, EUR 145.3 million in total. million). The increase was fuelled by growth in mobile At the end of 2018, DNA had an undrawn EUR 150 mil- Net debt/EBITDA ratio was 1.34 at the end of the re- service revenue and improved operational effi ciency. lion revolving credit facility (150 million), and undrawn view period (1.12). EUR 15 million overdraft facility (15 million). In addition, DNA has a commercial paper programme worth EUR DNA’s equity ratio was 45.6% at the end of December CONSUMER BUSINESS KEY FIGURES 150 million (150 million), under which EUR 50 million (50.6%). The equity ratio fell due to the increase in lia- was drawn by the end of the review period (20 million). bilities towards the end of the period, mostly attribut- 1-12/2018 1-12/2018 1-12/2017 able to the bond off ering and also to funds drawn from EUR million Reported Adjusted* Reported Change-% Net gearing increased and was 67.8% at the end of the commercial paper programme. December (50.3%). Net sales 684.9 687.1 658.7 4.3

EBITDA 218.8 217.5 199.8 8.9

CASH FLOW AND FINANCIAL KEY FIGURES % of net sales 31.9 31.7 30.3

Operating result, EBIT 123.7 118.7 104.6 13.5 1-12/2018 1-12/2018 1-12/2017 EUR million Reported Adjusted* Reported % of net sales 18.1 17.3 15.9 Cash fl ow after investing activities 63.4 63.4 107.7 * Adjusted fi gures are disclosed as prepared under 2017 revenue guidance and do not currently incorporate the impact from the adoption of IFRS 15 as of 1 January 2018. **Group key fi gures

Corporate business for premises. Operating result decreased and was EUR Net debt, EUR million 15.1 million (19.0 million), or 6.6% (8.3%) of net sales. 379.3 379.3 304.3 Corporate business net sales remained at the same Comparable operating result amounted to EUR 15.1 level year-on-year and came to EUR 226.4 million (227.4 Net debt/EBITDA 1.33 1.34 1.12 million (22.0 million). million). Net gearing, % The comparability of operating result in the reference 62.7 67.8 50.3 EBITDA decreased from the reference period and was period was aff ected by an item of EUR 3.1 million relat- EUR 66.2 million (72.0 million), or 29.2% (31.7%) of net Equity ratio, % 46.9 45.6 50.6 ed to impairment of data systems. Depreciation to the sales. EBITDA was weakened by higher production amount of EUR 51.1 million (53.1 million) was allocated costs in the reporting period. EBITDA for the reference * Adjusted fi gures are disclosed as prepared under 2017 revenue guidance and do not currently incorporate the impact from the adoption of IFRS to corporate business. 15 as of 1 January 2018. period was improved by a withdrawal from provisions

CORPORATE BUSINESS KEY FIGURES In March 2018, Standard & Poor’s Global Ratings assigned a long-term credit rating of BBB to DNA. The EQUITY RATIO, % 1-12/2018 1-12/2018 1-12/2017 outlook is stable. EUR million Reported Adjusted* Reported Change-% 50 In March 2018, DNA issued a senior unsecured bond 45.6 Net sales 226.8 226.4 227.4 -0.4 of EUR 250 million. The seven-year bond matures on 40 27 March 2025 and carries a fi xed annual coupon rate EBITDA 66.2 66.2 72.0 -8.1 of 1.375%. Trading of the bond on the Nasdaq Helsinki 30 commenced on 29 March 2018. The proceeds from % of net sales 29.2 29.2 31.7 the bond off ering were partially used for the partial 20 repurchase of DNA’s existing EUR 100 million fi xed- Operating result, EBIT 15.2 15.1 19.0 -20.6 rate notes due 28 November 2018 and EUR 150 million 10 % of net sales 6.7 6.6 8.3 fi xed-rate notes due 12 March 2021 and the rest will be used for general corporate purposes (Note 6). In 0 2014 2015 2016 2017 2018 Comparable operating result, EBIT** 15.2 15.1 22.0 -31.6 March, DNA booked a one-time fi nancial cost of EUR 2.1 million due to re-fi nancing of bonds. % of net sales 6.7 6.6 9.7

* Adjusted fi gures are disclosed as prepared under 2017 revenue guidance and do not currently incorporate the impact from the adoption of IFRS 15 as of 1 January 2018. **Group key fi gures 94 DNA ANNUAL REPORT 2018 95 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT

CAPITAL EXPENDITURE RESEARCH AND DEVELOPMENT

In 2018, capital expenditure was EUR 139.1 million DNA’s service development occurs during the ordinary course of business and is accounted for as a normal operat- (144.0 million). Operative capital expenditure increased ing expense. somewhat and was EUR 134.7 million (132.9 million), OPERATIVE CAPEX, EUR MILLION AND or 14.7% (15.0%) of net sales. Spectrum licence fees OPERATIVE CAPEX % OF NET SALES contributed EUR 4.4 million (11.1 million) to total capital % expenditure in the January-December period. 150 35 NETWORK INFRASTRUCTURE AND 135 Major individual items included in capital expenditure 30 120 NEW TECHNOLOGIES in the review period were 4G network capacity expan- 25 sion and development, 5G readiness as well as fi bre 90 20 DNA makes continuous investments in mobile and the frequency auction. In November 2018, DNA started optic networks and transmission systems. 14.7 fi xed networks to keep providing high-quality connec- to test 5G technology in domestic broadband connec- 15 In December 2018, we paid EUR 4.2 million of 3.5 MHz 60 tions to support the growing use of devices and digital tions in Vantaa, and deployed its fi rst 5G base stations spectrum license payment in advance. Payment will be 10 services. DNA’s 4G network reaches almost 100% of that operate on the 3.5 GHz frequency in Helsinki city 30 booked as investments in the fi rst quarter of 2019. 5 the population in mainland Finland. centre at the end of December. DNA’s mobile network is also NB-IoT ready. The NB-IoT (Narrow Band Internet 0 In the fourth quarter, 4G traffi c volumes in DNA’s net- 0 of Things) technology supports the use of IoT. DNA 2014 2015 2016 2017 2018 works grew 37% from the reference period. Total data has also piloted LTE-M technology in its 4G network, Operative capex, EUR million traffi c in DNA’s mobile network was up 31%. In Octo- which makes it possible to introduce new types of IoT ber-December, 92% of all mobile data was transferred Operative capex % of net sales services as we head towards the 5G era. DNA’s financial objective is to keep operative capital in the 4G network. expenditure at less than 15% of net sales. DNA also completed an upgrade of its backbone The DNA Valokuitu Plus (DNA Fibre Optic Plus) network in 2018, in preparation for the higher capacity network enables broadband speeds of up to a Gi- requirements of 5G in particular. Both the capacity and gabit-class per second without any changes to the programmability of the backbone were enhanced sig- housing company’s internal network. Gigabit-class nifi cantly. DNA has also installed a signifi cant number speeds are available to more than 620,000 households. of building switches, which has improved the availa- In 2018, DNA’s fi bre optic connections became availability of gigabit-class (1 Gbit/s) services to both private CAPITAL EXPENDITURE ble to housing companies and corporate customers in and corporate customers. 1-12/2018 1-12/2018 1-12/2017 the cities of Jyväskylä, Vaasa and Seinäjoki. During the EUR million Reported Adjusted* Reported Change-% last quarter, the fi rst housing companies in Vaasa were According to the report* released by Teffi cient, DNA’s connected to DNA’s fi bre optic network. customers have the highest mobile data usage per Consumer Business 92.9 92.9 96.9 -4.2 subscription in the world. For example, in December DNA has been systematically preparing its mobile 2018, an average of 23.5 gigabytes of mobile data per Corporate Business 45.4 45.4 43.4 4.6 network for 5G with the introduction of 5G-capable subscription was used in DNA’s network. The new 5G technology and increased network capacity. In October networks and services will accelerate the use of mobile Unallocated - 0.8 3.7 -78.2 2018, DNA won the 5G frequency band it pursued in data further and will also extend it into new areas. Total capital expenditure 138.3 139.1 144.0 -3.4

Capital expenditure is defi ned as additions to property, plant and equipment and intangible assets excluding business acquisitions, gross acquisition cost of spectrum licences capitalized and additions through fi nance leases and asset retirement obligations. Capital expenditure includes annual cash instalments for capitalized spectrum licences. Unallocated capital expenditure comprise sales commissions.

Operative capital expenditure 133.9 134.7 132.9 1.3

% of net sales 14.7 14.7 15.0

Spectrum licence 4.4 4.4 11.1 -

Total capital expenditure 138.3 139.1 144.0 -3.4

Operative capital expenditure is reported capital expenditure excluding annual cash instalments for capitalised spectrum licenses. *Adjusted fi gures are disclosed as prepared under 2017 revenue guidance and do not currently incorporate the impact from the adoption of IFRS 15 as of 1 January 2018.

*Press release about Teffi cient’s report: https://corporate.dna.fi /press-releases?type=stt1&id=69710242

96 DNA ANNUAL REPORT 2018 97 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT

PERSONNEL MANAGEMENT AND GOVERNANCE AND SIGNIFICANT LITIGATION MATTERS At the end of December 2018, DNA Group had 1,590 in November 2018 and participated in GPTW Finland employees (1,601), of which 637 were women (643) and 2018. DNA’s personnel satisfaction has improved for 953 men (958). four consecutive years. The AGM also decided to change the classifi cation of Salaries and employee benefi t expenses paid in Jan- DNA’s offi ce concept has been implemented in DNA Signifi cant litigation matters unrestricted equity. In previous years, the company uary-December amounted to EUR 107.3 million (111.1 premises across Finland and the fl exible working mod- The processing of the claim related to the trademark has, when repurchasing its own shares, recorded the million). el, which allows employees to decide independently dispute between Deutsche Telekom AG and DNA con- subscription price of own shares in a way that reduced where they work without discussing this with their tinues at Helsinki District Court. One of DNA’s strategic objectives is being a great place the amounts of retained earnings of previous fi nancial supervisor, will be gradually adopted in customer to work. Satisfi ed, motivated and qualifi ed employees periods. The AGM decided to cancel previous account- services. Management and governance are a crucial foundation for DNA’s ability to provide the ing treatment in which the amount paid for acquisi- DNA Plc has a line organisation, comprising Consumer best customer service on the market. DNA is steering its management culture towards tion of own shares has been recorded as a deduction Business, Corporate Business, Technology, and Infor- leadership by coaching, which was the main theme of earnings and further decided that corresponding DNA participates in the annual Great Place to Work® mation Management and IT units as well as support for DNA’s supervisor development in 2018. Continuous shares be removed from the reserve for invested un- (GPTW) survey to monitor the development of per- functions. interaction between the supervisor and the employee restricted equity insofar the company has funds left in sonnel satisfaction. DNA received the Great Place to is a key element of leadership by coaching. At the end of the review period, DNA’s Executive Team the reserve from invested unrestricted equity following Work® certifi cate for the second consecutive year comprised CEO Jukka Leinonen, CFO Timo Karppinen, the distribution of funds decided in the AGM. This Senior Vice President, Consumer Business Pekka Väisä- change has no eff ect on the total amount of unrestrict- nen, Senior Vice President, Corporate Business Hannu ed equity. *The global Trust Index employee survey is used in more than 50 countries and contains 58 statements that measure the employee experience at the workplace. Rokka, Senior Vice President, Technology Tommy Ole- The minutes of the General Meeting are available at nius, Senior Vice President, Human Resources Marko www.dna.fi /agm. PERSONNEL BY BUSINESS SEGMENT Rissanen, Senior Vice President, Legal Aff airs Asta Ran- 2018 2017 Change, % tanen, Senior Vice President, Strategy Christoff er von At the constitutive meeting of the Board of Directors Schantz and CIO Janne Aalto. held after the Annual General Meeting, Pertti Korho- Consumer Business 913 942 -3.1 nen was elected Chairman, and members of the Audit Decisions of Annual General Meeting 2018 Corporate Business 677 659 2.7 Committee and the Personnel Committee were elected DNA Plc’s Annual General Meeting was held on 22 from among the Board members. Audit Committee Total personnel 1,590 1,601 -0.7 March 2018. The AGM adopted the fi nancial state- members are Kirsi Sormunen (Chair), Jukka Ottela and ments and discharged the Board of Directors and the Margus Schults. Personnel Committee members are CEO from liability for the fi nancial period 2017. Pertti Korhonen (Chair), Anu Nissinen, Jukka Ottela and Margus Schults. PERSONNEL BY AGE GROUP Dividend was confi rmed to be EUR 0.46 per share; 2018 2017 2016 further it was decided that a capital payment of EUR Board of Directors in 2018 0.17 per share from the reserve for invested unrestrict- From 1 January 2018 to 22 March 2018, the Board of < 25 1% 1% 2% ed equity and an extra capital payment of EUR 0.47 per Directors consisted of Pertti Korhonen as the Chair, share be paid. All in all, it was decided that EUR 1.10 be 25-35 26% 29% 30% and Anu Nissinen, Tero Ojanperä, Jukka Ottela, Mar- paid as dividend and as capital payment from invested gus Schults, Kirsi Sormunen and Heikki Mäkijärvi as unrestricted equity per share. The dividend and the 36-45 38% 37% 36% members. extra capital payment were paid on 4 April 2018. 46-55 24% 23% 22% DNA’s General Meeting on 22 March 2018 nominated The AGM approved the Nomination Committee’s pro- six members to the Board of Directors: Pertti Korhonen posal from 15 March 2018, concerning the election and 56-63 10% 10% 9% as the Chair, and Anu Nissinen, Tero Ojanperä, Jukka remuneration of Board members. The number of Board Ottela, Margus Schults and Kirsi Sormunen. DNA's Over 63 members was confi rmed to be six. Re-elected members 0% 0% 1% Board convened on 13 occasions. include Pertti Korhonen, Anu Nissinen, Tero Ojanperä, In total 100% 100% 100% Jukka Ottela, Margus Schults and Kirsi Sormunen. The Audit Committee in 2018 remunerations paid to the members of the Board of The Audit Committee included the following members: Directors remained unchanged. 1 January-22 March 2018, Kirsi Sormunen (Chair), Juk- KEY PERSONNEL INDICATORS PricewaterhouseCoopers continues as the Group’s au- ka Ottela and Heikki Mäkijärvi 2018 2017 2016 ditor, with Authorised Public Accountant Mika Kaarisa- lo as the principal auditor. From 22 March 2018, Kirsi Sormunen (Chair), Jukka Average number of personnel 1,605 1,639 1,677 Ottela and Margus Schults. The AGM approved the proposal of the Board of Direc- Wages and salaries, EUR million 107.4 111.1 112.9 tors to authorise the Board to decide on the repurchase The Audit Committee convened on fi ve occasions. of own shares of the company, as well as to decide on a share issue, to dispose of own shares held by the company and an issue of special rights.

98 DNA ANNUAL REPORT 2018 99 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT

Personnel Committee in 2018 Corporate Governance Statement Participation in the matching share plan is voluntary. Telecoms Oy; Seppo Vikström, PHP Holding Oy; Esko The fi rst saving period in 2019-2020 begins in April Torsti, Ilmarinen Mutual Pension Insurance Company. Members of the Personnel Committee in 2018: In accordance with the Finnish Corporate Governance 2019 and will run until March 2020. The saved shares The Chairman of DNA’s Board of Directors Pertti Kor- Pertti Korhonen (Chair), Anu Nissinen, Jukka Ottela Code, DNA publishes a separate Corporate Govern- are purchased quarterly at market value after the honen participates in the work of the committee. and Margus Schults. ance Statement, including s salary and remuneration publication of fi nancial results. The Board of Directors report, for 2018. The statement also covers other The three shareholders whose portion of the votes The Personnel Committee convened four times with of DNA will decide annually on possible new saving important aspects of governance at DNA and will be conferred by all the shares in the company according full attendance. periods and their terms. published with DNA’s Annual Report on 28 February to the shareholders’ register, maintained by Euroclear 2019, separately from the Board of Director’s report. Composition of DNA’s Nomination Committee Finland Ltd, is the greatest on 1 September are entitled to appoint the committee members. The Nomination DNA’s three largest shareholders appointed the follow- Committee is tasked with preparing proposals for the ing representatives to the Shareholders’ Nomination Annual General Meeting regarding the election and Committee in September 2018: Tommi Aurejärvi, Finda SHARES AND SHAREHOLDERS remuneration of Board members.

DISTRIBUTION BY SECTOR 31 DECEMBER 2018 Shares On 9 May 2018, DNA received a notifi cation according to Chapter 9, Section 5 of the Securities Markets Act DNA’s share is traded on Nasdaq Helsinki (the Hel- from Finda Telecoms Oy, stating that the company’s Shareholders by sector Number of shares % of shares sinki Stock Exchange). On 31 December 2018, DNA’s holdings and proportion of voting rights in DNA Plc had registered shares totalled 132,303,500 (132,303,500) fallen below the 30% threshold as a result of a business Households 5,239,905 4.0 and the share capital registered in the Finnish Trade transaction made on 8 May 2018, and now correspond Register amounted to EUR 72,702,225.65 (EUR to 28.26% of DNA Plc’s shares and voting rights. Public sector 8,298,874 6.3 72,702,225.65). At the end of December, the Group held 182,789 treasury shares. In March 2018, a total of Share-based reward systems Financial and insurance institutions 40,093,245 30.3 82,028 treasury shares were handed over to partic- DNA has a Performance Share Plan (PSP) for senior Companies 43,077,258 32.5 ipants of the Group’s long-term share-based reward management and other key employees. The plan has system (Bridge Plan 2017). See note 10 for more infor- three three-year earning periods: 2017–2019, 2018– Non-profi t communities 616,452 0.5 mation on DNA’s share-based reward system. 2020 and on 20 December, DNA’s Board of Directors Direct foreign ownership In 2018, a total of 62,379 million DNA shares, totalling decided on new performance period of 2019–2021. In 143,374 0.1 EUR 1.135 billion, were traded on the Nasdaq Helsinki addition, DNA has a Restricted Share Plan (RSP). See Nominee registered 34,834,392 26.3 Stock Exchange. The highest quotation was EUR 22.02 note 10 for more information on DNA’s share-based and the lowest EUR 14.80. The average rate was EUR incentive scheme. In total 132,303,500 100 18.19 and volume-weighted average rate EUR 18.20. The DNA adheres to the recommendation on the sharehold- closing quotation on the last trading day of the review ings of the Group Executive Team. According to the period, 28 December 2018, was EUR 17.08 and the recommendation, each Executive Team member should BREAKDOWN BY SIZE OF HOLDING 31 DECEMBER 2018 market capitalisation (without DNA’s holding of its own own a share in the company, which corresponds to his shares) was EUR 2.257 billion (EUR 2.066 billion at end or her annual fi xed gross salary. In order to achieve the of 2017). recommended ownership, the Executive Team mem- Number of DNA’s share was added to the OMX Helsinki 25 index, bers must retain ownership of at least 50 per cent of Number of shares shareholders % of shareholders Number of shares % of shares (Nasdaq Helsinki: OMXH25) on 1 August, 2018. The the shares they have received through the share-based 5,273 36.95 324,839 0.25 OMX Helsinki 25 Index is the leading equity index for incentive systems (calculated based on the net number 1–100 the Finnish equity market including the 25 most traded of shares remaining after deduction of the applicable 101–500 6,217 43.56 1,525,168 1.15 Blue chip companies on Nasdaq Helsinki. withholding tax), until the person’s share in DNA is in line with the recommendation. Shareholders and fl agging notifi cations 501–1,000 1,642 11.51 1,204,911 0.91 DNA has issued a stock exchange release on the incen- At the end of the review period, the number of regis- 1,001–5,000 903 6.33 1,748,942 1.32 tive plans for senior executives and other key employ- tered shareholders totalled 14,272, nominee registra- ees on 31 January 2017. 99 tions included (9). The proportion of nominee registra- 5,001–10,000 0.69 707,259 0.54 tions and direct foreign shareholders at the end of 2018 Matching share plan for DNA personnel 10,001–50,000 83 0.58 1,658,227 1.25 was 26.43%. In December, the Board of Directors of DNA Plc decid- On 31 December 2018, the largest shareholders of DNA ed on the establishment of a matching share plan for 50,001–100 000 21 0.15 1,482,768 1.12 Plc were Finda Telecoms Oy (28.26%), PHP Holding all DNA employees. The purpose of the plan is to steer 100,001–500,000 21 0.15 3,939,635 2.98 Oy (25.78%) and Ilmarinen Mutual Pension Insurance the activities of personnel towards the attainment of strategic objectives, as well as to improve the long- Company (3.87%). At the end of the review period, 500,001– 13 0.09 119,711,751 90.48 they held a total of 57.90% of DNA’s shares and voting term commitment of personnel and off er incentives in rights. the form of potential increase in share value. In total 14,272 100.00 132,303,500 100.00

100 DNA ANNUAL REPORT 2018 101 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT

HOLDINGS OF DNA SHARES BY MEMBERS OF HOLDINGS OF DNA SHARES BY MEMBERS OF DNA’S EXECUTIVE TEAM DNA’S BOARD OF DIRECTORS REPORT ON NON-FINANCIAL Shares, 31 Shares, 31 December 2018 December 2018 INFORMATION

Jukka Leinonen 45,000 Pertti Korhonen 11,001 Business model description formed by a dedicated and qualifi ed person. Any risks Timo Karppinen 17,000 Anu Nissinen 15,917 related to the availability of competent personnel DNA plays a signifi cant role in society by providing are reviewed as part of the Group’s risk management Asta Rantanen 10,900 Tero Ojanperä 3,440 important communication connections and maintaining process. infrastructure that is critical to the operation of society. Pekka Väisänen 11,503 Jukka Ottela 16,241 Respect for human rights According to its strategy, DNA will meet the growing Hannu Rokka 5,789 Margus Schults 6,875 demand for faster high-quality connections. The com- DNA operates in Finland, where the risk of human pany invests in a very competitive and cost-eff ective rights violations is low. Human rights issues are Tommy Olenius Kirsi Sormunen 23,531 3,000 network and service platform infrastructure to meet relevant in DNA’s supply chain. In the case of mo- the growing communications needs of consumers, bile devices for example, some suppliers operate in Janne Aalto 20,000 businesses and the society in general. By doing so, countries that involve human rights risks. Corporate Christoff er von Schantz 18,000 DNA promotes digitalisation and competitiveness in responsibility risks of DNA’s most signifi cant suppliers Finland. are assessed and their responsibility performance is Marko Rissanen 5,000 evaluated annually. In terms of corporate responsibility, the main areas include the provision of comprehensive high-quality DNA’s Supplier Code of Conduct is added to all new connections to customers, satisfi ed and productive supplier agreements and also applies to the suppliers’ personnel, mitigation of the environmental impact of subcontractors. According to the Supplier Code of DNA’s business and greenhouse gas emissions in par- Conduct, the suppliers undertake to comply with the DNA’S FINANCIAL OBJECTIVES AND ticular, and responsible business practices and good internationally recognised human rights as set out in governance. the United Nations Universal Declaration of Human Rights, the basic international labour rights as set out DIVIDEND POLICY Social responsibility and employee-related in the basic conventions of the International Labour factors Organization (ILO), and all laws and offi cial regulations DNA’s vision and mission are to have the most satisfi ed in all countries where they operate. DNA’s target dividend payout ratio is some 70 to 90% net debt/EBITDA ratio of less than 2.0; which may customers. DNA’s development is guided by customer of DNA’s free cash fl ow to equity for the fi nancial year. temporarily be exceeded if DNA fi nds attractive There were no human rights violations at DNA in 2018. opportunities that allow the company to comple- satisfaction, which is measured by means such as the DNA’s medium-term fi nancial objectives: Any risks related to the supply chain and human rights ment its off ering in existing markets. Net Promoter Score (NPS), a measure of the likelihood violations are reviewed as part of the Group’s risk man- net sales growth faster than average market growth that a customer would recommend the product or DNA achieved good results in the above-mentioned service. Relationship NPS, or rNPS, which measures agement process. EBITDA margin of at least 32% by the end of 2020 objectives in 2018. EBITDA margin improved, and came overall relationship to a business, improved further in Environmental responsibility to 31.0% at the end of 2018, while operative capital operative capital expenditure less than 15% of sales 2018, in both Consumer and Corporate Business. expenditure was 14.7% of net sales and the net debt/ The main environmental impact of DNA’s business is (excluding capitalized spectrum licence payments) EBITDA ratio was 1.34. DNA is aware of the fact that personnel satisfaction related to greenhouse gas emissions. DNA has signed drives the positive development of customer satisfac- up to the Society’s Commitment to Sustainable Devel- tion. Several measures were implemented in both Con- opment, in which the Group undertakes to reduce the sumer and Corporate Customer Service to promote climate impacts of its operations. personnel satisfaction and well-being. The source of DNA’s direct greenhouse gas emissions DNA participated in the Great Place to Work® survey (Scope 1) are fuels used in company vehicles and for the fi fth time in 2018. The survey measures employ- back-up generators. Energy indirect greenhouse gas ee satisfaction and the company’s employer image. emissions (Scope 2) mostly originate in production, i.e. CORPORATE RESPONSIBILITY According to the survey, as many as 90% of DNA the electricity consumption of DNA’s radio network employees consider DNA to be a great workplace. The and transmission equipment as well as the mainte- results of the Great Place to Work® survey conducted nance of their equipment facilities. Sources of other DNA’s approach to corporate responsibility is guided risks as part of the Group’s overall risk management in 2018 are published in February 2019. indirect greenhouse gas emissions (Scope 3) include, by the corporate responsibility strategy, which was process. In March 2018, DNA became the fi rst large company for example, logistics, business travel, waste as well as updated in 2018. The strategy comprises four main DNA’s corporate responsibility objectives and meas- in Finland to be receive the Family-Friendly Workplace purchased goods, services and capital goods. areas: digital inclusion, being a great place to work, cli- ures are described in a separate corporate responsibil- certifi cate from the Family Federation of Finland. mate-friendly operations and good governance. DNA’s Increased mobile data volumes challenge the energy ity report according to the Global Reporting Initiative corporate responsibility objectives are specifi ed in the One of DNA’s strategic objectives is being a great place effi ciency of the radio network, because the continu- (GRI) reporting model. The report is published annually strategy. DNA has assessed corporate responsibility to work. DNA places special emphasis on personnel ously growing volumes require more equipment, which with DNA’s Annual Report. development with the aim of having every task per- in turn increases energy consumption. On the other

102 DNA ANNUAL REPORT 2018 103 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT hand, the relative per-data energy consumption is re- or political events and changes in consumer behaviour Regulatory risks ble-rate instruments. In order to manage liquidity risk, duced through improved technical performance of LTE. and has specifi ed control practices for them. in addition to liquid assets the Group uses credit limits. Both national and EU regulation have signifi cant impact To manage customer credit risk, the credit history of In 2018, DNA updated its climate objectives as follows: Anti-corruption and anti-bribery on the operation of the telecommunications market new customers is checked as part of the ordering pro- in Finland. Regulatory infl uence on the price level of DNA will reduce energy indirect greenhouse gas DNA has zero-tolerance of corruption and bribery: cess. The Group’s foreign interest risk is insignifi cant, DNA’s products and services as well as the wholesale emissions (Scope 2) by 100% by 2023 from the level DNA’s Code of Conduct bans any corruption. Every since the majority of its cash fl ow is euro-denominated. reported in 2014. DNA employee is required to attend DNA’s Code of products that DNA procures from other operators and Conduct training. By the end of 2018, 84% of DNA per- the criteria used in distributing frequencies, may have Damage risk The emission calculation methods for DNA’s main sonnel had completed the training. In addition, DNA’s a signifi cant impact on DNA’s business. In anticipation of possible unforeseen damage risks, product categories will be adjusted during 2019 Sustainability Manager and Fraud Manager train DNA DNA has continuous insurance policies covering as- and DNA will set a Scope 3 climate objective Regulatory initiatives indicating signifi cant risks to personnel on DNA Group’s anti-corruption policies and pects of its operations including personnel, property, accordingly. DNA include the new European Electronic Communica- procedures as required. tions Code, EU Data Protection Regulation and authori- business interruption, third-party liability and crim- In 2018, DNA’s energy indirect greenhouse gas emis- inal action. There is a specifi c insurance in place for DNA has separate guidelines for the giving and receiv- ty decisions on signifi cant market power (SMP). sions (Scope 2) were 17,900 tonnes (19,600), which is cyber damage risks. Damage risks are prevented and ing of business gifts. 9% less than in 2017. DNA’s Scope 2 emissions have de- Financing risks minimised by means such as security guidelines and creased by approximately 40% since 2014, which is due Any corruption risk is assessed as part of the Group’s In order to manage the interest rate risk, the Group’s personnel training. to procurement of renewable energy and increased risk management process. borrowings have been spread between fi xed- and varia- energy effi ciency in the radio networks. There were no incidents of corruption or bribery at As part of the Group’s risk management process, DNA DNA in 2018. has identifi ed possible risks and opportunities related to climate change in terms of the impact of physical EVENTS AFTER THE REVIEW PERIOD NEAR-TERM RISKS AND UNCERTAINTIES DNA acquires Moi Mobiili DNA Shareholders’ Nomination On 11 January 2019, DNA acquired European Mobile Committee’s proposal to the Annual According to the company, there have been no signif- rights are being negotiated. DNA monitors the TV and Operator Oy. The company’s wholly-owned subsidiary General Meeting 2019 icant changes in near-term risks and uncertainties in entertainment service market intensively and con- Moi Mobiili Oy provides mobile services to private DNA Shareholders’ Nomination Committee submitted the review period. tinuously enhances its service off ering to anticipate and corporate customers and has operated since 2016 a proposal to DNA Plc Annual General Meeting 2019 on changes in the market. Strategic and operative risks as a service operator in DNA’s mobile network. The 21 January 2019. The Shareholders’ Nomination Com- The nature of DNA’s operations and customer re- acquired business operations will be consolidated into mittee proposed to the AGM that the number of Board The Finnish telecommunications market is charac- quirements place high demands on DNA’s information DNA’s fi gures from the fi rst quarter of 2019 onwards. of Director members is seven and proposed re-election terised by tough competition between established systems and network infrastructure. DNA’s business The transaction is not expected to have a signifi cant of current members Pertti Korhonen, Anu Nissinen, operators, and a high degree of penetration of tele- is capital-intensive, and continuous maintenance and impact on DNA’s net sales or EBITDA for 2019. Tero Ojanperä, Jukka Ottela and Kirsi Sormunen. The communications solutions. DNA mainly operates in improvement of the Group’s network infrastructure is committee proposed that Anni Ronkainen and Ted Finland, a market where, for instance, the number of essentially linked to its success. Roberts are elected as new members. The committee mobile phones per capita is among the highest in the also proposed that Pertti Korhonen continues as the world, which limits the prospects of future growth in DNA makes signifi cant investments in high-quality data Chairman of the Board of Directors. More information the number of subscriptions. systems and data analytics tools to deepen customer on proposed members is available at www.dna.fi /agm. understanding and to create a good omnichannel cus- DNA analyses changes in the operating environment tomer experience. DNA’s business operations are de- and the resulting possible new business opportunities, pendent on information systems, which involve several which always involve higher risks than conventional interconnected risks but also provide business-critical and established business operations. opportunities for utilising data. International players have a strong presence in the Use of mobile devices that have a constant network OUTLOOK FOR 2019 competitive environment of TV and entertainment connection is increasing strongly among both business services. DNA’s competitors include traditional oper- and private users. The Internet of Things (IoT) will ators, but increasingly also OTT (over-the-top) service Market outlook further expand the volume of data traffi c. As the IoT providers that deliver content over the Internet to Mobile data use will continue to grow as private and becomes more common, for example through the intro- While Finland’s economic growth is expected to slow mobile devices. The role of media companies’ own dis- business users increase their use of digital services and duction of new kinds of smart devices, the role of good down, the Bank of Finland forecasts GDP growth to re- tribution channels and services is also becoming more OTT video services. This trend will increase the de- information security, data security and high operational main moderate. We expect the mobile network service important. mand of high-speed 4G subscriptions as well as the use network reliability gain in importance. market growth to moderate and competition to remain of mobile data usage per subscription. Customers are The ongoing shift in media use will provide both new intense for mobile communication services. risks and opportunities, for example while content

104 DNA ANNUAL REPORT 2018 105 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT prepared to pay more for faster data connections. The DNA’s guidance for 2019 share of 4G subscriptions in DNA’s mobile subscription GROUP KEY FINANCIAL FIGURES DNA’s net sales in 2019 is expected to remain at the base is expected to grow over the coming years. same level as in 2018, and EBITDA in 2019 is expected Use of mobile devices that have a constant network to increase substantially from 2018. DNA’s fi nancial po- 2018 2018 connection and IP-based communication solutions is sition and liquidity are expected to remain at a healthy EUR million Reported Adjusted 2017 2016 2015 2014 increasing strongly among both business and private level. Net sales 911.8 913.5 886.1 858.9 828.8 831.5 users. DNA’s guidance for 2019 is disclosed with consider- In the mobile communication network, the volume of ation to the impact of the adoption of IFRS 16. The EBITDA 284.9 283.6 271.8 236.3 227.7 202.2 SMS and voice traffi c is expected to continue to fall. adoption of IFRS 16 from the beginning of 2019 is % of net sales 31.2 31.0 30.7 27.5 27.5 24.3 The decline of the market for fi xed-network voice ser- estimated to have a positive impact of approximately vices is expected to continue. UR 17 million in EBITDA in 2019. The impact of IFRS 16 Comparable EBITDA 284.9 283.6 271.8 247.1 226.7 211.0 In the consumer market, demand for fast broadband on operating result (EBIT) is insignifi cant. % of net sales 31.2 31.0 30.7 28.8 27.3 25.4 subscriptions and entertainment services is expected DNA’s guidance on future outlook to increase, driven in particular by the popularity of DNA issues guidance on its net sales and EBITDA. Their Depreciation, amortisation and impairment 146.0 149.9 148.2 145.0 154.6 176.6 streaming and on-demand video services. The demand development is assessed by means of verbal descrip- for traditional pay TV services is expected to decline Operating result, EBIT 138.9 133.8 123.5 91.2 73.1 25.6 tion in comparison to the reference period. The guid- further. ance on the fi nancial outlook is based on the full-year % of net sales 15.2 14.6 13.9 10.6 8.8 3.1 Fixed-network broadband customers are expected to forecast, which takes into account the prevailing busi- continue to switch to housing association broadband ness and market situation. Statements and estimates Comparable operating result, EBIT 138.9 133.8 126.6 102.1 72.0 55.7 subscriptions and faster speeds. The fi xed-network provided are based on the management’s view of the broadband subscription base is expected to remain at development of the Group and its business operations. % of net sales 15.2 14.6 14.3 11.9 8.7 6.7 its current level. Growing use of services such as cloud Net result before tax and entertainment services increases the demand for Board of Directors’ proposal for 127.7 122.6 114.2 81.7 61.6 15.2 high-speed and high-performance networks. distributable funds Net result for the period 102.2 98.1 93.1 65.2 50.0 12.4 DNA Plc’s distributable funds in the fi nancial state- Private and public sector organisations are digitising ments amount to EUR 153,757,726.37, of which profi t for their services and creating new digital business, which Return on investment (ROI), % 14.1 14.2 13.1 9.6 7.6 2.8 the fi nancial year came to EUR 89,225,172.49. makes the availability of networks and services vital. Return on equity (ROE), % 16.4 16.9 15.5 11.6 9.7 2.4 More mobile and versatile ways of working will boost The Board of Directors proposes to the Annual Gen- demand for services such as cloud and video confer- eral Meeting that a dividend of EUR 0.70 per share be Capital expenditure 138.3 139.1 144.0 143.6 154.7 149.6 ence services. Companies transfer their applications to distributed for the fi nancial period ending 31 December the cloud to increase their operational effi ciency, which 2018. The Board also proposes that an extra dividend of Cash fl ow after investing activities 63.4 63.4 107.7 83.5 97.3 -123.7 will boost the demand for secure high-speed connec- EUR 0.40 per share be distributed. In total, the Board’s Free cash fl ow to equity 72.0 72.0 118.8 92.6 101.5 48.7 tions. proposal is to distribute EUR 1.10 per share. The demand for Industrial Internet solutions and M2M Based on the number of shares on 31 December 2018, Net debt, EUR million 379.3 379.3 304.3 321.7 412.3 479.4 (Machine to Machine) subscriptions is expected to the dividend and extra dividend in total to be paid Net debt/EBITDA 1.12 grow. As the IoT becomes more common, the role of comes to EUR 145,332,782.10. The Board proposes that 1.33 1.34 1.36 1.81 2.37 good information security, data security and high oper- the remaining profi t be retained and carried further in Net gearing, % 62.7 67.8 50.3 53.9 78.5 95.1 ational network reliability gain in importance. the Group’s non-restricted equity. Equity ratio, % DNA sees fi xed wireless broadband access as the rstfi According to the proposal, the dividend will be paid to 46.9 45.6 50.6 48.4 44.1 41.4 application to strongly benefi t from 5G technology. shareholders registered in the company’s shareholder Personnel at the end of period 1,590 1,590 1,601 1,668 1,672 1,748 This makes high-quality connections possible for build- register held by Euroclear Finland Ltd on the dividend ings without ready access to a fi bre optic connection record date of 1 April 2019. The dividend is proposed to or where acquiring a fi bre optic connection would be be paid on 10 April 2019. prohibitively expensive. In the 2020s, 5G technology DNA’s Annual General Meeting 2019 is likely to have a broad range of other applications in areas such as smart traffi c and health care. DNA’s Annual General Meeting will take place at the Finlandia Hall in Helsinki on 28 March 2019 at 1pm. DNA’s Board of Directors will issue an invitation to the Annual General Meeting in a stock exchange release. DNA Plc Board of Directors

106 DNA ANNUAL REPORT 2018 107 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT

RECONCILIATION OF COMPARABLE FREE CASH FLOW TO EQUITY KEY FIGURES 2018 2018 2018 2018 EUR in thousands Reported Adjusted 2017 2016 2015 2014 EUR in thousands Reported Adjusted 2017 2016 2015 2014 Comparable EBITDA 284,921 283,645 271,772 247,100 226,660 210,954 EBITDA 284,921 283,645 271,772 236,290 227,714 202,227 Operative capital expenditure -133,871 -134,672 -132,904 -136,890 -147,950 -142,839 Direct transaction costs of the listing - - - 6,486 - - Operating free cash fl ow 151,050 148,973 138,867 110,210 78,710 68,115 Cost impacts on the share-based compensation plan of the listing - - - 3,795 - - Interest paid, net -16,942 -16,942 -8,720 -8,608 -7,792 -9,183

Restructuring costs - - - 528 - 4,806 Income taxes, paid -12,428 -12,428 -25,775 -5,180 2,096 -10,678

Net gains from business disposals - - - - -1,055 - Adjusted change in net working capital -47,687 -45,610 19,312 -1,497 37,917 -2,175

Direct transaction costs related to business Change in provisions -2,034 -2,034 -4,856 -2,307 -9,447 2,620 acquisitions - - - - - 3,290 Free cash fl ow to equity 71,959 71,959 118,830 92,617 101,484 48,699 VAT sanctions, previous periods - - - - - 630

Costs related to a study on the strategic alternatives ------

Comparable EBITDA 284,921 283,645 271,772 247,100 226,659 210,954 Operating result 138,898 133,751 123,523 91,249 73,093 25,601 CASH FLOW AND FINANCIAL KEY Direct transaction costs of the listing - - - 6,486 - - FIGURES Cost impacts on the share-based compensation plan of the listing - - - 3,795 - - 2018 2018 Restructuring costs - - - 528 - 4,806 Reported Adjusted 2017 2016 2015 2014

Net gains from business disposals - - - - -1 055 - Cash fl ow after investing activities, EUR million 63.4 63.4 107.7 83.5 97.3 -123.7

Direct transaction costs related to business - - - - - 3,290 Net debt, EUR million 379.3 379.3 304.3 321.7 412.3 479.4 acquisitions Net debt/EBITDA 1.33 1.34 1.12 1.36 1.81 2.37 VAT sanctions, previous periods - - - - - 630 Net gearing, % 62.7 67.8 50.3 53.9 78.5 95.1 Costs related to a study on the strategic alternatives ------Equity ratio, % 46.9 45.6 50.6 48.4 44.1 41.4

Write-off of the PlusTV brand - - - - - 12,490

Write-off of other non-current assets - - 3,057 - - 8,862

Comparable operating result 138,898 133,751 126,579 102,059 72,038 55,680

108 DNA ANNUAL REPORT 2018 109 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT

PER-SHARE KEY FIGURES Weighted average adjusted 2,259,743,780 2,259,743,780 2,070,549,775 1,342,880,525 - - number of shares during the fi nancial period (1,000) 2018 2018 2017 Reported Adjusted Reported 2016 2015 2014 Adjusted number of shares at 62,378 600 62,378,600 79,550,798 56,981,069 - - the end of the fi nancial period Basic earnings per share, (1,000) EUR 0 . 7 7 0.74 0.71 0.51 0.39 0.10 Trading volume for the 47.1% 47.1% 60.2% 43.1% - - Diluted earnings per share, fi nancial period, % EUR 0.77 0.74 0.71 0.51 0.39 0.10 Weighted average adjusted 132,039 132,039 131,923 127,733 127,306 127,183 Equity per share, EUR 4.58 4.23 4.58 4.5 4.1 4.0 number of shares during the fi nancial period (1,000) Dividend per share, EUR 0.70* 0.70* 0.46 0.55 0.31 0.24 Adjusted number of shares at 132,039 132,039 132,081 132,304 127,318 127,187 Capital payment per share 0.40* 0.40* - - - - the end of the fi nancial period from the reserve for invested (1,000) unrestricted equity, EUR

Extra capital payment per share - - 0.17 - - - from the reserve for invested unrestricted equity, EUR

Dividend per earnings, % - - 0.47 - - -

Capital payment per share 91% 95% 65% 108% 81% 242% from the reserve for invested unrestricted equity, from result %

Extra capital payment per share 52% 54% - - - - from the reserve for invested unrestricted equity, from result % Eff ective dividend yield, % - - 24% - - - KEY OPERATIVE INDICATORS Eff ective share-based capital - - 66% - - - payment from the reserve for invested unrestricted equity,% 2018 2018 2017 Reported Adjusted Reported 2016 2015 2014 Eff ective share-based extra capital 4.1 4.1 2.9% 5.4% - - payment from the reserve for Number of mobile 2,877,000 2,877,000 2,811,000 2,742,000 2,621,000 2,505,000 invested unrestricted equity,% communication network subscriptions at end of Price/earnings ratio (P/E) 2.3 2.3 - - - - period*

Lowest price of the share - - 1.1% - - - Revenue per user (ARPU), 18.7 18.8 18.4 17.1 17.0 17.8 EUR** Highest price of the share - - 3.0% - - - Customer CHURN rate, %** 16.2 16.2 18.3 16.1 16.0 16.9 Average price of the share 22.2 23.1 22.0 19.9 - - Number of fi xed line 1,152,000 1,152,000 1,130,000 1,113,000 1,120,000 1,108,000 Market capitalisation 14.80 14.80 10.13 9.87 - - subscriptions at end of period Trading volume for the fi nancial 22.02 22.02 15.85 10.29 - - period Broadband subscriptions 481,000 481,000 458,000 440,000 436,000 415,000

Trading volume for the fi nancial 18.19 18.19 13.90 10.09 - - Cable TV subscriptions 630,000 630,000 619,000 608,000 606,000 593,000 period, % Telephone subscriptions 41,000 41,000 53,000 65,000 78,000 100,000

*includes voice and mobile broadband subscriptions **includes postpaid subscriptions * Board of Directors proposal to the AMG

110 DNA ANNUAL REPORT 2018 111 DNA ANNUAL REPORT 2018 BOARD OF DIRECTORS’ REPORT

Operative capital expenditure = Operative capital expenditure is reported capital CALCULATION OF KEY FIGURES expenditure without annual cash instalments for spectrum licenses.

Result for the fi nancial period attributable to equity Operating free cash fl ow= Comparable EBITDA - operative capital expenditure holders of the parent company Earnings per share (EUR) = Free cash fl ow to equity (FCFE)= Comparable EBITDA – total capital expenditure excluding Weighted number of shares during the fi nancial period the annual cash instalment for spectrum licences - change excluding treasury shares in net working capital including an adjustment between operative capex and cash-based capex in order to present Equity attributable to equity holders of the parent company Equity per share (EUR) = FCFE on a cash basis, however excluding cash instalments Number of shares on balance sheet date for spectrum licences and adjusted with the items aff ecting comparability - net interest paid - income taxes paid - Net debt (EUR)= Non-current and current borrowings -cash and cash change in provisions adjusted with the items aff ecting equivalents comparability.

Net debt Net gearing, % = Total equity DNA presents alternative performance measures as operations. Net debt, ratio of net debt to EBITDA, net additional information to fi nancial measures presented gearing, equity ratio, return on equity and return on Total equity Equity ratio, % = in the consolidated income statement, consolidated investment are presented as complementing measures Total assets – advances received statement of fi nancial position and consolidated state- because, in DNA’s view, they are useful measures of ment of cash fl ows prepared in accordance with IFRS. DNA’s ability to obtain fi nancing and service its debts. EBITDA (EUR)= Operating result (EBIT) + depreciation, amortisation In DNA’s view, alternative performance measures pro- Capital expenditure, operative capital expenditure, and impairments vide signifi cant additional information on DNA’s results cash fl ow after investing activities, operating free cash of operations, fi nancial position and cash fl ows and are fl ow and free cash fl ow to equity provide also addition- Net result before income taxes + fi nance expense Return on investment (ROI), % * = widely used by analysts, investors and other parties. al information of the cash fl ow needs of DNA’s opera- Total equity + borrowings (average for the period) tions. DNA presents comparable EBITDA and comparable Net result for the period EBIT, which have been adjusted with material items Alternative performance measures should not be Return on equity (ROE), % * = outside of ordinary course of business to improve viewed in isolation or as a substitute to the IFRS Total equity (average for the period) comparability between periods. EBITDA, comparable fi nancial measures. All companies do not calculate EBITDA and comparable EBIT are presented as com- alternative performance measures in a uniform way, Net debt Net debt/EBITDA* = plementing measures to the measures included in the and therefore DNA’s alternative performance measures Operating result + depreciation + amortisation + impairments consolidated income statement because, in DNA’s may not be comparable with similarly named measures view, they increase understanding of DNA’s results of presented by other companies. Comparable EBITDA (EUR)= EBITDA excluding items aff ecting comparability

Comparable operating result, EBIT (EUR) = Operating result, EBIT excluding items aff ecting comparability

Items aff ecting comparability= Items aff ecting comparability being material items outside CALCULATION OF PER-SHARE KEY FIGURES ordinary course of business such as net gain or losses from business disposals, direct transaction costs related to Result for the fi nancial period attributable to equity business acquisitions, write-off of non-current assets, costs holders of the parent company for closure of business operations and restructurings, fi nes Earnings per share (EUR) = Weighted number of shares during the fi nancial period or other similar payments, damages as well as costs related excluding treasury shares to a one time study on the Company’s strategic alternatives to grow its shareholder base, costs related to the strategic Equity attributable to equity holders of the parent company assessment work of the Board of Directors as well as direct Equity per share (EUR) = transaction costs of and cost impacts of the listing. Number of shares on balance sheet date

Cash fl ow after investing activities (EUR) = Net cash generated from operating activities + net cash used Dividend distribution for the fi nancial period Dividend per share (EUR) = in investing activities Number of shares on balance sheet date Capital expenditure (EUR)= Capital expenditure comprise additions to property, plant Dividend per share and equipment and intangible assets excluding business Dividend per earnings (%) = acquisitions, gross acquisition cost of spectrum licence Earnings per share and additions through fi nance leases and asset retirement obligations and including annual cash instalments for the Stock price per share Price/earnings ratio (P/E) = spectrum licence. Earnings per share

*12-month adjusted

112 DNA ANNUAL REPORT 2018 113 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS 2018 FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1 Jan– 1 Jan– EUR in thousands Note 31 Dec 2018 31 Dec 2017 1 Jan– 1 Jan– Net sales 5 911,758 886,088 EUR in thousands Note 31 Dec 2018 31 Dec 2017

Other operating income 6 3,804 4,177 Net result for the period 102,234 93,086

Materials and services −398,661 −389,194

Employee benefi t expenses 9 −107,388 −111,055 Items that will not be reclassifi ed to profi t and loss:

Depreciation, amortisation and impairments 8 −146,023 −148,249 Remeasurements of post employment benefi t obligations 24 249 71 Other operating expenses 7 −124,592 −118,244 Other comprehensive income, Operating result, EBIT 138,898 123,523 net of tax 249 71

Finance income 10 523 889

Finance expense 11 −11,700 −10,257 Total comprehensive income 102,483 93,157

Share of associates’ results 16 14 4

Net result before income tax 127,736 114,158 Attributable to:

Income tax expense 12 −25,502 −21,072 Owners of the parent 102,483 93,157

Net result for the period 102,234 93,086

Attributable to:

Owners of the parent 102,234 93,086

Earnings per share for net result attributable to owners of the parent:

Earnings per share, basic (EUR) 13 0.77 0.71

Earnings per share, diluted (EUR) 13 0.77 0.71

Notes are an integral part of the consolidated fi nancial statements. Notes are an integral part of the consolidated fi nancial statements.

116 DNA ANNUAL REPORT 2018 117 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

1 Jan–31 1 Jan– 1 Jan–31 1 Jan– EUR in thousands Note Dec 2018 31 Dec 2017 EUR in thousands Note Dec 2018 31 Dec 2017

Assets Liabilities

Non-current assets Non-current liabilities

Goodwill 15 327,206 327,206 Borrowings 26, 27, 29 348,090 173,362

Other intangible assets 15 191,783 178,070 Employment benefi t obligations 24 1,714 2,028

Property, plant and equipment 14 412,550 421,580 Provisions 25 5,307 6,813

Investments in associates 16 1,209 1,199 Deferred tax liabilities 19 34,825 22,783

Other investments 17 117 117 Other non-current liabilities 34,978 23,605

Trade and other receivables 18 76,026 38,468 Total non-current liabilities 424,914 228,591

Deferred tax assets 19 7,691 8,475

Total non-current assets 1,016,582 975,115 Current liabilities

Borrowings 26, 27, 29 53,837 154,518

Current assets Provisions 25 277 490

Inventories 20 31,681 22,909 Trade and other payables 28 226,687 234,603

Trade and other receivables 18 244,624 195,563 Income tax liabilities 5,056 4,391

Income tax receivables - 9,780 Total current liabilities 285,857 394,003

Cash and cash equivalents 21 22,654 23,592 Total liabilities 710,771 622,594

Total current assets 298,960 251,843 Total equity and liabilities 1,315,541 1,226,958

Notes are an integral part of the consolidated fi nancial statements. Total assets 1,315,541 1,226,958

Equity

Equity attributable to owners of the parent

Share capital 22 72,702 72,702

Reserve for invested unrestricted equity 22 506,079 653,056

Treasury shares 22 −2,806 −4,055

Retained earnings −73,439 −210,425

Net result for the period 102,234 93,086

Total equity 604,770 604,363

118 DNA ANNUAL REPORT 2018 119 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS

1 Jan–31 1 Jan–31 1 Jan–31 1 Jan– EUR in thousands Dec 2018 Dec 2017 EUR in thousands Dec 2018 31 Dec 2017

Cash fl ows from operating activities Change in cash and cash equivalents −937 −22,647

Net result for the period 102,234 93,086 Cash and cash equivalents at beginning of year 23,592 46,238

Adjustments 1) 180,330 173,780 Cash and cash equivalents at end of year 22,654 23,592

Change in net working capital 2) −45,100 15,266

Dividends received 10 8 1) Adjustments:

Interest paid −6,438 −7,901 Depreciation, amortisation and impairment 146,023 148,249

Interest received 335 373 Gains and losses on disposals of non-current assets −324 −50

Other fi nancial items −10,839 −1,193 Other non-cash income and expense −14 −4

Income taxes paid −12,428 −25,775 Finance income and expense 11,177 9,368

Net cash generated from operating activities 208,104 247,646 Income tax expense 25,502 21,072

Change in provisions −2,034 −4,856

Cash fl ows from investing activities Total adjustment 180,330 173,780

Investments in property, plant and equipment (PPE) and intangible assets −145,058 −139,974 2) Change in net working capital: Proceeds from sale of PPE 402 75 Change in trade and other receivables −27,678 −9,588 Other investments - −52 Change in inventories −8,772 −1,183 Net cash used in investing activities −144,657 −139,951 Change in trade and other payables −8,649 26,037

Change in net working capital −45,100 15,266 Cash fl ows from fi nancing activities

Direct costs relating to share issue - −3,314

Treasury share acquisition - −14,035

Dividend payment −145,333 −72,767

Proceeds from borrowings 859,880 99,893

Repayment of borrowings −778,932 −140,119

Net cash generated from (used in) fi nancing activities −64,385 −130,342

Notes are an integral part of the consolidated fi nancial statements.

120 DNA ANNUAL REPORT 2018 121 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Reser- Reser- ve for ve for invested invested Share unrestrict- Treasury Retained Total Share unrestrict- Treasury Retained Total EUR in thousands Note capital ed equity shares earnings equity EUR in thousands Note capital ed equity shares earnings equity

1 January 2017 72,702 652,719 - −128,995 596,427 1 January 2018 72,702 653,056 −4,055 −117,340 604,363

Comprehensive income Changes in accounting policy - IFRS 9 −759 −759

Net result for the period 93,086 93,086 Changes in accounting policy - IFRS 15 41,281 41,281

Other comprehensive income Changes in accounting policy - IFRS 2 1,199 1,199

Total other comprehensive income, Comprehensive income net of tax 24 71 71 Net result for the period 102,234 102,234 Total comprehensive income - - - 93,157 93,157 Other comprehensive income Transactions with owners Total other comprehensive income, Expenses paid in connection with net of tax 24 249 249 share issue net of tax 337 337 Total comprehensive income - - - 102,483 102,483 Treasury share acquisition −14,035 −14,035 Transactions with owners Share-based payments 23 9,980 −8,735 1,245 Reclassifi cation −62,420 62,420 - Dividends relating to 2016 22 −72,767 −72,767 Share-based payments 23 1,250 285 1,535 Total contribution by and distributions to owners - 337 −4,055 −81,502 −85,221 Dividends relating to 2017 22 −60,776 −60,776

31 December 2017 72,702 653,056 −4,055 −117,340 604,363 Capital payment 22 −84,557 −84,557

Total contribution by and distributions to owners - −146,977 1,250 1,930 −143,798

31 December 2018 72,702 506,079 −2,806 28,794 604,770

Notes are an integral part of the consolidated fi nancial statements.

122 DNA ANNUAL REPORT 2018 123 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

The Group has identifi ed that changes will take place The excess of the consideration transferred, the NOTES TO THE CONSOLIDATED in reporting in the following areas: amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous Allocation of discounts to the performance obliga- FINANCIAL STATEMENTS equity interest in the acquiree over the fair value of the tions: discounts are to be recognised evenly Group’s share of the identifi able net assets acquired is throughout the contract period. Previously, dis- recorded as goodwill. counts were allocated to the revenue of periods when discounts were granted. Subsidiaries are fully consolidated from the date on 1 GENERAL INFORMATION which control is transferred to the Group. They are Under the new guidance, activation and connection de-consolidated from the date that control ceases. fees are recognised during the contract period. DNA Group (“DNA”, the “Company”) is a national supplier of mobile communication services. The parent company IFRS 15 also requires that incremental costs of All inter-company transactions, receivables, liabilities, of DNA Group is DNA Plc domiciled in Helsinki, Finland at the registered address Läkkisepäntie 21. obtaining a contract are capitalised. Previously, unrealised gains and internal profi t distribution are Copies of the Consolidated Financial Statements are available online at www.dna.fi or at the Group parent activation and connection fees were recognised at eliminated in the consolidated fi nancial statements. company head offi ce at Läkkisepäntie 21, 00620 Helsinki, Finland. time of activation. Incremental costs of obtaining Unrealised losses are also eliminated unless the a contract were previously recognised at entry to transaction provides evidence of an impairment of the DNA Plc’s Board of Directors approved the release of these consolidated fi nancial statements at a meeting on contract. transferred asset. Distribution of profi t between parent 31 January 2019. Under the Finnish Limited Liability Companies Act, shareholders can approve or disapprove company shareholders and non-controlling sharehold- Changes to IFRS 2 – Classifi cation and measurement the consolidated fi nancial statements in the Annual General Meeting held after the release. The Annual General ers is presented in the income statement, and non-con- of share-based payment transactions Meeting is also entitled to amend the consolidated fi nancial statements. trolling interest in equity is presented in the balance The changes clarify the classifi cation and measurement sheet as a separate component of shareholder's equity. of share-based payment transactions. They apply to The Group did not have any non-controlling sharehold- the following areas: accounting for cash-settled share- ers during the 2017-2018 fi nancial periods. 2 ACCOUNTING PRINCIPLES based payment transactions, share-based payment transactions with net settlement features and modi- Associated companies fi cations of share-based payment transactions from Associated companies are companies in which the measurement of fi nancial instruments, including a new Basis of preparation cash-settled to equity-settled. As a result, DNA’s share- Group has a signifi cant infl uence. A signifi cant infl u- expected credit loss impairment model. The standard The Consolidated fi nancial statements have been based payment transactions have been reclassifi ed to ence is realised if the Group holds more than 20% of also contains new requirements for hedge account- prepared in accordance with International Financial equity-settled on the date of transition 1 January 2018. the voting rights or otherwise has a signifi cant infl u- ing. The classifi cation and measurement of fi nancial Reporting Standards (IFRS), the IAS and IFRS standards Previously, they were treated as equity-settled and as ence without exercising full control. liabilities largely correspond to the current guidance in as well as SIC and IFRS interpretations applicable as cash-settled. IAS 39. Associated companies are consolidated using the at 31 December 2018. International Financial Reporting As a result of adopting the standards, DNA had to equity method. If the Group’s share of the associated The IFRS 15 Revenue from Contracts with Customers Standards refer to the standards and interpretations adjust its accounting principles and has made certain companies’ losses exceeds the carrying amount of the applicable by corporations set out by the Finnish Ac- DNA Plc adopted the standard in the reporting period retrospective adjustments. More information is in note investment, the investment is recognised in the bal- counting Act and other regulations set out on the basis beginning on 1 January 2018 retrospectively according 33. ance sheet at zero value and the portion of the losses of this ordinance enforced for application in accordance to the transitional requirements with the cumulative exceeding the carrying amount is not consolidated Subsidiaries with the procedure stipulated in the regulation (EC) No eff ect of initially applying the standard recognised unless the Group has agreed to meet the associated 1606/2002 of the European Parliament and of the Coun- as an adjustment to the opening balance of retained The Consolidated fi nancial statements comprise the companies’ obligations. Unrealised profi ts between the cil. The notes to the Consolidated fi nancial statements earnings. Revenue may be recognised over time or at parent company DNA Plc and all its subsidiaries. Group and its associated companies are eliminated also comply with Finnish accounting and corporate a point in time, and the main criterion is the transfer Subsidiaries are all entities over which the Group has to the extent of the Group’s share of ownership. The legislation complementing the IFRS standards. of control. Revenue determination is based on the control. The Group controls an entity when the Group investment in each associated company includes good- The Consolidated fi nancial statements have been transaction prices specifi ed in the contract, which are is exposed to, or has rights to, variable returns from its will arising from the acquisition. The Group’s share prepared under the historical cost convention, with allocated to each performance obligation on a relative involvement with the entity and has the ability to aff ect of the associated companies’ result for the fi nancial the exception of investments and fi nancial assets and standalone selling price basis. Revenue is recognised those returns through its power to direct the activities year corresponding the Group’s share of ownership is fi nancial liabilities at fair value through the income when the performance obligation is satisfi ed by trans- of the entity. recognised separately below the operating result line. ferring the good or service to the client. The Group’s share of its associates’ movements in other statement. The fi nancial statements are presented in The acquisition method of accounting is applied to comprehensive income is recognised in the Group’s thousand euros. In contrast to previously used principles, DNA recog- business combinations. The consideration transferred other comprehensive income. The Group’s associates nises sales revenue for the performance obligations for the acquisition of a subsidiary is the fair values of New and amended standards adopted by have not had any such items during the fi nancial years in fi xed-term contracts evenly throughout the con- the assets transferred, the liabilities incurred and the the Group 2017 and 2018. tract period. Contract-based activation and one-time equity interests issued by the Group. Acquisition-relat- The Group has adopted the following standards and fees, discounts and incremental costs of obtaining a ed costs are expensed as incurred. Identifi able assets Joint arrangements amended standards during the fi nancial year com- contract are recognised during the contract period. acquired and liabilities and contingent liabilities as- mencing 1 January 2018: Joint arrangement refers to an arrangement where two Revenue from the sale of mobile devices is recognised sumed in a business combination are measured initially or more entities jointly control an arrangement. Joint at a certain point of time. at their fair values at the acquisition date. On an acqui- IFRS 9 Financial Instruments arrangements are classifi ed either as a joint venture or sition-by-acquisition basis, the Group recognises any The new standard replaces the existing standard IAS The adoption of the new standard has no impact on a joint operation. A joint venture is a joint arrangement non-controlling interest in the acquiree either at fair 39 Financial Instruments: Recognition and Meas- the recognition of revenue from open-ended contracts, whereby the Group has rights to the net assets of the value or at the non-controlling interest’s proportionate urement. IFRS 9 will change the classifi cation and which are recognised as before. arrangement, whereas in a joint operation, the Group share of the acquiree’s net assets.

124 DNA ANNUAL REPORT 2018 125 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS has rights to the assets, and obligations for the liabili- in the carrying amount of the asset only when it is period. Intangible assets are amortised from the date debt. Rental obligations are included in interest-bear- ties, relating to the arrangement. probable that the future economic benefi ts that are they are ready for use. Subsequent the initial recogni- ing liabilities. The Group has used fi nance lease agree- attributable to the asset will fl ow to the Group and the tion, capitalised development expenditure is carried at ments mainly to lease telecommunication network and Finnish Shared Network Ltd, established during the cost of the item can be measured reliably. Other repair cost less accumulated amortisation and impairment. IT equipment. reporting period 2014 is accounted for in accordance and maintenance costs are recognised against profi t or Currently the Group has no uncompleted capitalised to IFRS 11 as a joint operation. The parties control the Leases are classifi ed as operating lease agreements loss as they are incurred. development expenditure. arrangement jointly. According to the contractual if the risks and rewards incidental to ownership are agreement, all decisions on essential operations of Depreciation on assets is calculated using the straight- Contractual customer base retained by the lessor. Lease amounts paid on the basis the company require unanimous agreement by both line method over the estimated useful lives. Land is not of operating leases are recognised as an expense in the Contractual customer base acquired in a business com- parties. The joint arrangement is classifi ed as a joint recognised as a depreciable asset. income statement over the lease term on a straight-line bination is recognised at fair value at the acquisition operation. The contractual arrangement establishes basis. The depreciation periods are as follows: date. The contractual customer base has a fi nite useful the owners of Finnish Shared Network Ltd rights to life and is carried at cost less accumulated amortisa- Impairment of property, plant and the assets and obligations for liabilities, relating to the Buildings and constuctions tion. Amortisation is calculated using the straight-line equipment and intangible assets arrangement, and the parties’ rights to the correspond- Buildings 25 years method over the expected life of the customer base. ing revenues and obligations for the corresponding Constructions 10–25 years Goodwill and intangible assets in progress are tested expenses. DNA recognises its share of Finnish Shared Other intangible assets for impairment annually and whenever there is any Machinery and equipment Network Ltd’s assets, liabilities, revenues and expenses indication of impairment of an asset. Intangible assets Networks 5–15 years Intangible assets are recorded at historical cost in the in its consolidated fi nancial statements. with fi nite useful lives and tangible assets are tested Machinery and equipment 3–15 years balance sheet only when it is probable that the future for impairment whenever events or changes in circum- economic benefi ts that are attributable to the asset Segment reporting Residual values and useful lives are reviewed at the end stances indicate that the carrying amount may not be will fl ow to the Group and the cost can be measured The reporting on the operating segments is consistent of each reporting period and, if appropriate, adjusted recoverable. reliably. with the internal reporting to the chief operating de- to refl ect any changes in the expectation of fi nancial For the purposes of assessing impairment, assets cision-maker and DNA’s operating segments form also benefi t. Intangible assets with fi nite useful life are recognised are grouped at the lowest levels for which there are the reportable segments. The CEO, who is responsible as an expense on a straight-line basis in the income Depreciation on property, plant and equipment ceases separately identifi able cash infl ows which are largely for strategic and operative decisions, has been nomi- statement over their known or foreseeable useful life. when the asset is classifi ed as held for sale. independent. nated the chief operating decision maker to make deci- The useful lives of other intangible assets are as fol- sions about resources to be allocated to the segments Capital gain or loss on the decommissioning and dis- Recoverable amount is the higher of the asset’s fair lows: and to assess their performance. posal of property, plant and equipment are included in value less costs to sell, or the value in use. Value in use other operating income or other operating expenses. Development costs 3 years refers to the estimated future net cash fl ows obtainable Foreign currency translation Customer contracts and the related customer Intangible assets from the asset or a cash generating unit (CGU), which The consolidated fi nancial statements are presented in relationships 1–20 years are discounted to their present value. The discount rate euro, which is the functional and presentation currency Goodwill IT software 3–10 years is the pre-tax rate that refl ects current market assess- Brand 10–30 years of the Group’s parent company. Goodwill arises on the acquisition of subsidiaries ments of the time value of money and the risks specifi c Spectrum license 17–20 years to the asset. Foreign currency transactions and represents the excess of the consideration trans- Other intangible assets 2–10 years ferred over the Group's interest in the fair value of the An impairment loss is recognised when the asset’s Foreign currency transactions are translated into identifi able net assets acquired at the acquisition date. Inventories carrying amount exceeds its recoverable amount. functional currency applying the exchange rates valid Goodwill arising from business combinations is includ- An impairment loss is immediately recognised in the on the date of the transaction. Monetary items denom- Inventories are stated at the lower of cost or probable ed in intangible assets. Goodwill is tested annually for income statement. If an impairment loss is recognised inated in foreign currency are translated into functional net realisable value. Net realisable value is the esti- impairment and carried at cost less accumulated im- for a CGU, the loss is fi rst allocated to reduce good- currency applying the exchange rates quoted on the mated selling price in the ordinary course of business pairment losses. Impairment losses on goodwill are not will on the CGU and then to reduce other assets of balance sheet date. less estimated cost to sell. Inventories are stated at the reversed. Goodwill is allocated to operating segments the unit on a pro-rata basis. When an impairment loss weighted average price. Gains and losses on foreign currency transactions and for the purpose of impairment testing. is recognised, the useful life of the amortised asset is translation of monetary items are recognised in the Research and development expenditure Lease agreements reassessed. In respect of assets other than goodwill, an income statement. Exchange gains and losses related impairment loss is reversed if there is a change in the Group as a lessee to business operations are included in other operating Research expenditure is recognised as an expense in estimates used to determine the recoverable amount income or expenses. the income statement. Expenditure for the develop- Leases on property, plant and equipment are classifi ed for the asset. However, the reversal will not exceed the ment of new or improved products is capitalised as in- as fi nancial lease agreements if the risks and rewards carrying amount that the asset would have if an impair- Property, plant and equipment tangible assets in the balance sheet when the product incidental to ownership are substantially transferred ment loss had not been recognised. An impairment loss Items of property, plant and equipment have been car- is technically feasible and commercially viable and it to the Group. Assets acquired through fi nance lease for goodwill cannot be reversed. ried at their historical cost less accumulated deprecia- is likely that the future economic benefi ts attributable agreements are recognised in the balance sheet at the tion and impairment. to the development expenditure will go to the compa- lower of the fair value of the leased asset or present Employee benefi ts ny. Capitalised development expenditure comprises value of minimum lease payments. Assets based on Retirement benefi t obligations If an item consists of several components with varying material, work and testing expenses that are directly fi nance leases are amortised over their useful life or useful lives, each component is treated as a separate The Group’s employee pension plans are managed by attributable of completing the product for its intended within the shorter lease term. Payable lease amounts asset. In this case, the cost of replacement is capital- external insurance companies. The TyEL pension insur- use. Development costs previously recognised as an are split between fi nance expenses and loan repay- ised. In other cases, subsequent costs are included ances managed by the pension insurance companies expense are not recognised as an asset in a subsequent ments over the lease term based on a pattern refl ect- are treated as defi ned contribution plans. ing a constant periodic interest rate for the remaining

126 DNA ANNUAL REPORT 2018 127 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

A defi ned contribution plan is a pension plan under conditions should be met. At the end of each reporting Deferred income tax is recognised on temporary diff er- time for the payment of a performance obligation may which the Group pays fi xed contributions into a sep- period, the Group revises its estimates of the number ences arising between the carrying amount of assets be diff erent from the time of recognition. According arate entity. The Group has no legal or constructive of equity instruments expected to vest. Any eff ect of and liabilities and their tax bases. However, deferred to management evaluation, no fi nancing component obligations to pay further contributions if the fund the adjustments made to the original estimates is rec- tax liabilities are not recognised if they arise from the applies to the performance obligations. Revenue from does not hold suffi cient assets to pay all employees ognised in the income statement and correspondingly initial recognition of goodwill or if it arises from initial monthly services is recognised when the service is the benefi t relating to employee service in the current in shareholders’ equity and liabilities. recognition of an asset or liability in a transaction other performed even though discounts are generally given and prior periods. Post-employment plans other than than a business combination that, at the time of the in the beginning of the contract period. Revenue from If the entitlement to shares is cancelled because the defi ned contribution plans are defi ned benefi t plans. transaction, aff ects neither accounting, nor taxable the sales of mobile devices is recognised at the time of specifi ed vesting conditions have not been met, the profi t or loss. sale, i.e. when the device is transferred to the custom- Defi ned benefi t plans generally pay an agreed benefi t previously recognised expense is reversed at the time er, regardless of whether the customer pays for the at retirement, determined by a formula based on one or of forfeiture. The most signifi cant temporary diff erences arise from device fully at the time of sale or by monthly payments more factors, such as the employee’s age at retirement, the depreciation of property, plant and equipment and Any payments received for exercising the subscription throughout the contract period. years of service and compensation earned while in fair value measurement on business combinations, right less the related direct transaction costs are recog- employment. unused tax losses and unused taxable depreciation. A customer has the right to cancel the service con- nised in the reserve for invested unrestricted equity. tract and return the device to DNA for 14 days. If the Net defi ned benefi t plan liability is reported in the Deferred income tax is determined using tax rates For more information on share-based payments, please customer cancels the contract, the activation fee is not balance sheet at present value at the end of the annual enacted by the balance sheet date. see notes to the fi nancial statements. returned to the customer. No allocation applies to the reporting period. The fair value of any plan assets is Deferred tax assets are recognised only to the extent refund right in accounting, and returns are processed deducted from the present value. The Group’s obliga- Provisions and contingent liabilities that it is probable that future taxable profi t will be as normal refunds. Revenue has not been adjusted by tions with regard to defi ned benefi t plans are based Provisions are recognised when the Group has a legal available against which the temporary diff erence can the estimated amount of refunds as they are expected on unbiased actuarial assumptions using the projected or constructive obligation as a result of past events, be utilised. to be low. unit credit method. The present value of the obligation it is probable that an outfl ow of resources will be is determined by using the market yields of high-qual- Mobile devices have an extended warranty of 3 years. required to settle the obligation and the amount can Revenue recognition 1 January 2018 ity bonds issued by companies as the discount rate. During the warranty period, DNA is obliged to service be reliably estimated. Provisions are measured at the Contractual performance obligations include voice, These bonds are issued in the currency in which the or replace the mobile device. In terms of accounting, present value of the expenditure required to settle data, operator and TV services as well as mobile and benefi ts are to be paid and their maturity corresponds there are no essential provisions made in relation to the the obligation. The discount rate used to determine data terminal equipment. One contract may include in essential aspects to the maturity of the pension obli- warranty. The prolonged warranty period is not consid- the present value refl ects current market assessments several performance obligations and DNA may agree gation being considered. ered a separate performance obligation. of the time value of money at the time of review and on the delivery of several services or combinations of Gains or losses resulting from actuarial losses or past the risks involved in the obligation. Where the Group services and equipment to a customer. Those service A contract may include discounts, such as a lower acti- service costs are recognised in the statement of other expects some of the obligation to be reimbursed by a and equipment contracts that have been signed with a vation or monthly fee. Discounts are allocated to each comprehensive income when they occur. third party, the reimbursement is recognised as a sepa- customer at the same time are treated as one contract performance obligation in proportion to the standalone rate asset but only when it is virtually certain. in revenue recognition. Prices specifi ed in the contract selling prices and allocated evenly throughout the Past service costs are recognised immediately at fair are used as transaction prices, which are allocated to contract period. The time of allocation may diff er from value through the income statement. A restructuring provision is recognised if the Group has each performance obligation in proportion to the stan- the time of payment, because discounts are generally prepared a detailed restructuring plan and initiated its In contribution-based plans, the Group makes pay- dalone selling price. These are determined based on applied at the time of activation or included in the fi rst implementation or notifi ed thereof. ments to publicly or privately managed pension the standalone selling prices of the products included monthly service fees of the contract period. insurances, which are mandatory, contract-based or The Group recognises a provision for onerous con- in the contract at time of sale. When a customer purchases several products included voluntary. The Group has no other payment obligations tracts when the expected benefi ts to be derived from a A performance obligation may be fulfi lled over time or in certain product combinations, discounts for these apart from these. The payments are recognised as em- contract are less than the unavoidable costs of meeting at a point in time, and the main criterion is the transfer are allocated to the relevant performance obligations ployee expenses when they fall due. Payments made in the obligations under the contract. Provision are not of control. Subscription service contracts mainly com- in proportion to the standalone selling prices at time advance are recognised as assets in the balance sheet recognised for future operating losses. prise performance obligations that are satisfi ed over of sale. Activation and connection fees are charged for to the extent there are economic benefi ts available A provision for asset retirement obligation is recog- time. The performance is carried out throughout the subscription and data services. No individual good or in the form of refunds from the plan or reductions in nised when the Group is under contractual obligation contract period, and discounts and activation fees are service is transferred, so they are included in the trans- future contributions to the plan. regarding dismantling and demolition of leased equip- allocated evenly throughout the contract period. For action price, which is allocated to each performance Share-based payments ment and aerial sites, and telephone poles and masts. performance obligations that are satisfi ed at a certain obligation in proportion to the standalone selling prices point in time, such as mobile equipment or services and allocated evenly throughout the contract period. DNA Plc operates equity-settled, share-based reward Current and deferred income tax independent of other services, the customer is deemed plans, under which the entity receives services from For fi xed-term contracts, sales commissions and fees The tax expense for the period comprises current and to gain control at the entry to contract or at the time key employees as consideration for equity instruments paid on obtaining a contract are recognised as incre- deferred income tax. Income tax is recognised in the the separate service is ordered. of the Group. The compensation is paid either in shares mental costs and amortised. Incremental costs are income statement, except to the extent that it relates or in cash. The fair value of service given in return for The customer pays for the mobile equipment fully at amortised over the expected contract period or the to items recognised in other comprehensive income equity instruments is recognised as an expense. For the time of sale or by monthly payments throughout customer’s average contract period depending on the or directly in equity. In this case, the tax is also rec- shares, the total amount of expenses is based on the the contract period. Monthly service fees are paid by nature of the purchase cost and the service. ognised in other comprehensive income or directly in fair value of stock on the date of issue and for compen- monthly payments throughout the contract period. The equity, respectively. The current income tax charge on sation paid as cash, on the fair value on the reporting taxable income for the year is calculated using the tax date. The amount recognised as an expense is ac- rate enacted at the balance sheet date adjusted by any crued over the period of time during which all vesting income taxes for prior periods.

128 DNA ANNUAL REPORT 2018 129 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

Signifi cant judgements are related to estimating how the aggregate fair value of the undelivered items. DNA ward-looking, and expected default rates are based on the right to receive the contractual cash fl ows has sales commissions are to be allocated. Sales commis- has recognised tie-in deals using the residual method. historical realised credit losses. The lifetime expected expired and the Group has transferred substantially all sions and fees paid on obtaining a contract are amor- Future revenue from tie-in deals is discounted to the credit loss allowance is calculated by multiplying the risks and rewards of ownership. tised over the expected contract period or the custom- present value and the interest component of future gross carrying amount of trade receivables by the life- The table below illustrates the classifi cation of fi nan- er’s average contract period depending on the nature revenue is recognised as fi nance income. time expected credit loss rate. The changes in expect- cial instruments. of the purchase cost and the service. ed credit losses will be recognised in profi t and loss. DNA provides corporate customers with comprehen- Regarding assets measured at amortised cost, DNA is Borrowings Open-ended contracts are treated according to the sive functionality service agreements in telecommu- actively monitoring such instruments and will recog- previous recognition principle. nications, which may include switchboard services, Borrowings are recognised initially at the fair value of nise impairment through profi t and loss in accordance fi xed-line network telephony, mobile telephony, data consideration received less transaction costs incurred. For more information, please see note 5. with the set criteria. communication and other customised services. Reve- Borrowings are subsequently carried at amortised cost Revenue recognition 2017 nue from functionality services is recognised when the Classifi cation of fi nancial assets and liabilities using the eff ective interest rate method. The Group has services are rendered over the contract period. both current and non-current borrowings. They can The Group's net sales mainly comprise revenue from The new business-model driven classifi cation of fi nan- be interest-bearing or non-interest-bearing. Borrow- the sale of voice, data, TV and operator services; Revenue and expense from construction contracts cial assets contains three diff erent classes: amortised ings are derecognised once the Group’s obligations in periodical, activation and maintenance charges; and is recognised using the percentage of completion cost, fair value through profi t and loss and fair value relation to liability is discharged, cancelled or expired. revenue from the sale of equipment. Revenue is meas- method. The stage of completion is assessed for each through other comprehensive income. When a fi nancial liability measured at amortised cost is ured at the fair value of the consideration received or project on the basis of the actual costs incurred for Financial assets are recorded on the settlement date. modifi ed without this resulting in derecognition, a gain receivable net of discounts and value added taxes. work performed as a proportion of the estimated total During the initial recognition of fi nancial assets, the or loss is calculated as the diff erence between the orig- cost for the project. When it is probable that the total Revenue is recognised in the period in which the ser- Group classifi es them into the following groups: am- inal contractual cash fl ows and the modifi ed cash fl ows cost of the project will exceed total project revenue, vice has been performed, either based on the actual ortised cost, fair value through profi t and loss and fair discounted at the original eff ective interest rate. the expected loss is recognised immediately as an traffi c volume or over the contract term. Revenue from value through other comprehensive income. Classi- expense. When the outcome of the contract cannot be the rendering of services is recognised when it is prob- fi cation depends on the business model in which the estimated reliably, revenue is recognised only to the able that the economic benefi t will fl ow to the Group, fi nancial asset is held and the contractual terms of the extent of contract costs incurred that it is probable will and the revenue and expenses related to the transac- fi nancial asset. Financial assets are derecognised when be recoverable. tion can be reliably measured. Revenue from voice and data services is recognised in accordance with the ac- Interest and dividend tual use of the service. Termination revenue from voice Interest income is recognised using the eff ective inter- and data traffi c from other operators is recognised at est method, and dividend income is recognised when the time of transit across DNA’s network. When end the right to receive dividend is established. customers are charged for services provided by external content providers, amounts collected on behalf of Borrowing costs the service provider are not recognised as revenue. Recognition Borrowing costs are recognised as an expense in the Classifi cation Classifi cation Recognition according Subscription fees are recognised as revenue over the period in which they are incurred. according to according to according to to IFRS 9 1 subscription period. The sales of pre-paid phone cards, Financial assets and liabilities after 1 IAS 39 IFRS 9 IAS 39 January 2018 mainly for mobile phones, is deferred and recognised January 2018 as income based on the actual usage of the cards. Trade and other Loans and other Amortised cost 181,164 180,236 Activation and connection fees are recognised at the IFRS 9 replaces IAS 39 and changes the classifi cation receivables receivables time of activation of the subscription. Equipment sales and measurement of fi nancial instruments and recog- are recognised when the delivery has occurred and the nition of impairment loss. The standard also contains Interest-bearing Loans and other Fair value through risks and rewards incidental to ownership have been new requirements for hedge accounting. The Group investments receivables profi t and loss transferred to the customer, normally on delivery and experienced no material impact from the changes following the customer's acceptance. introduced by IFRS 9. Other investments Available-for-sale Fair value DNA can combine services and products to create a Impairment of fi nancial instruments fi nancial assets through profi t 117 117 single off ering. Off erings may include the delivery or According to the new model, impairment provisions and loss or other execution of a product, service or user right (tie-in must be recognised based on expected credit losses, comprehensive deals) and the payment can be issued either as a sepa- not based on incurred losses as required by IAS 39. At income rate payment or a combination of a separate payment DNA, this new impairment model applies to the recog- and a continuous payment fl ow. Equipment is recognition of impairment loss of trade receivables, which nised separately from the service, if both items are also must be recognised earlier than before. The Group’s sold separately and the ownership of the equipment is credit position has not changed between IAS 39 and transferred to the end user. Equipment and service rev- IFRS 9. DNA applies a simplifi ed approach and a pro- enue is recognised in proportion to the fair value of the vision matrix for trade receivables as trade receivables individual items. If fair value cannot be reliably meas- do not have a signifi cant fi nancing component. Accord- ured for the delivered items but it can be measured ingly, they are measured for impairment purposes at for the undelivered items, a residual method is used. an amount equal to lifetime expected credit losses. Under the residual method, the value allocated to the The approach based on expected credit losses is for- delivered items equals the total arrangement value less

130 DNA ANNUAL REPORT 2018 131 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

Derivative fi nancial instruments and hedge accounting the fair value are recognised in the other comprehen- Borrowings are derecognised from the balance sheet and assumptions. Management believes that the esti- sive income and presented as the fair value reserve in when the obligation specifi ed in the contract is dis- mates and assumptions used are suffi ciently reliable for The Group does not currently hold any derivative fi nan- equity. When the securities are sold or impaired with charged, cancelled or expired. The diff erence between determining fair values. cial instruments. DNA does not apply hedge account- the recognition of an impairment loss, the accumulated the carrying amount of a fi nancial liability extinguished ing. Valuation of intangible assets and property, fair value adjustments are removed from the equity and or transferred to another party and the consideration plant and equipment Financial assets and liabilities recognised in the income statement. Unquoted equity paid, including any non-cash assets transferred or securities are recognised at cost if their fair value can- liabilities assumed, shall be recognised in profi t or loss Intangible assets including goodwill represent approx- Accounting principles until 31 December 2017 not be reliably measured or the market is very inactive. as other non-cash income and expense. imately 39% of DNA’s total assets in 2018 (41% in 2017) The Group has adopted IFRS 9 according to the and property, plant and equipment represent approxi- Cash and cash equivalents comprise cash in hand and modifi ed retrospective transition method under which Derivative fi nancial instruments and hedge mately 31% of DNA’s total assets in 2018 (34% in 2017). deposits held at call with banks with original maturities comparative information will not be restated. This is accounting of three months or less. Bank overdrafts related to the Depreciation and amortisation expenses why the comparative information is stated using the The Group does not currently hold any derivative fi nan- cash pool accounts are included in current borrowings. accounting principles previously applied by the Group. cial instruments. DNA does not apply hedge account- Depreciation and amortisation expenses are based on The Group assesses at the end of each reporting period ing. management’s estimates of residual value, depreciation Financial assets whether there is objective evidence that a fi nancial and amortisation method and the useful life of proper- Share capital The Group's fi nancial assets are classifi ed as follows: asset or group of fi nancial assets is impaired. If there ty, plant and equipment and intangible assets. Esti- fi nancial assets at fair value through profi t or loss, is objective evidence of impairment, the resulting Outstanding ordinary shares are presented in share mates may change due to technological developments, loans and other receivables, and available-for-sale impairment loss is recognised through profi t or loss. capital. competition, changes in market conditions and other fi nancial assets. The classifi cation depends on the pur- If in a subsequent period, the amount of impairment factors and may result in changes in the estimated use- Critical accounting judgements and key pose for which the fi nancial assets were acquired and loss decreases, the reversal of the previously recog- ful life and in the amortisation or depreciation charges sources of estimation uncertainty are classifi ed at initial recognition. Financial assets are nised impairment loss on fi xed income investments is recognised through the income statement. Techno- initially recognised at fair value plus transaction costs recognised in the income statement. However, such The preparation of fi nancial statements requires the logical developments are diffi cult to predict and the for all fi nancial assets not carried at fair value through an impairment loss on equity investments cannot be use of accounting estimates which, by defi nition, will Group’s views on the trends and pace of development profi t or loss. Financial assets are derecognised when reversed through profi t or loss. seldom equal the actual results. Management also may change over time. Critical estimates in the evalu- the right to receive cash fl ows has expired or has been needs to exercise judgement in applying the Group’s ations of useful lives for tangible and intangible assets An impairment loss is recognised for accounts receiva- transferred and the Group has transferred substantially accounting principles. These estimates are based on include, but are not limited to, licence period and ex- ble when there is objective evidence that the outstand- all risks and rewards of ownership. historical experience and various other assumptions pected developments in technology and markets and in ing amounts cannot be collected in full. Among others, that management believe are reasonable under the the cash infl ows expected to be derived from the use of Financial assets at fair value through profi t or loss are a payment delayed for more than 180 days is consid- circumstances, the results of which form the basis for intangibles such as a brand or customer relationships. fi nancial assets held for trading or fi nancial assets clas- ered as such objective evidence. The impairment is making judgements about the carrying values of assets The useful lives of property, plant and equipment and sifi ed to this category at initial recognition. Financial as- determined by the diff erence between the receivable’s and liabilities that are not readily apparent from other intangible assets are reviewed at least annually taking sets at fair value through profi t or loss are subsequently carrying amount and the present value of estimated sources. The estimates and underlying assumptions are into consideration the factors mentioned above and all carried at fair value and gains and losses arising from future cash fl ows calculated using the initial eff ective reviewed on an ongoing basis. Revisions to accounting other important relevant factors. A change in esti- changes in the fair value are presented within fi nance interest rate. The carrying value of accounts receivable estimates are recognised in the period in which the mated useful life is a change in accounting estimate, income and fi nance expenses. In DNA these assets is decreased by using a separate reduction account estimate is revised and in all subsequent periods. and depreciation and amortisation plans are adjusted comprise derivatives not designated as hedges. and the loss is reported in other operating expenses in prospectively. For additional information on intangible the income statement. When the impairment loss is as- Management believes that the following areas com- Loans and other receivables are non-derivative fi nan- assets as well as property, plant and equipment subject certained it is removed from the balance sheet through prise the most diffi cult, subjective or complex judge- cial assets with fi xed or determinable payments that to amortisation and depreciation and their carrying the reduction account. If, in a subsequent period, the ments it has to make in the preparation of the fi nancial are not quoted in an active market and are not held for values as of the end of the reporting period, see notes amount of the impairment loss decreases, the reversal statements. For information on accounting principles trading. They are included in receivables in the balance 14 and 15 to the Consolidated fi nancial statements. applied, see the respective sections of note 2 Account- sheet and are classifi ed as current assets if they mature of the previously recognised impairment loss is recog- ing principles. Impairment testing within twelve months. The assets in this category are nised by reducing other operating expenses. initially recognised at fair value and subsequently Borrowings Business acquisitions The Group has made signifi cant investments in good- carried at amortised cost using the eff ective interest will and other intangible assets including IT systems, Borrowings are recognised initially at the fair value of Net assets acquired through acquisitions are meas- method. Trade receivables is the most signifi cant item licences, acquired brands and customer relationships consideration received less transaction costs incurred. ured at fair value. The consideration exceeding the fair included in trade and other receivables in the balance as well as in property, plant and equipment comprising Borrowings are subsequently carried at amortised cost value of assets acquired is recognised as goodwill. The sheet. mainly mobile and fi xed broadband networks. Good- using the eff ective interest method. Borrowings may measurement of fair value of the assets is based on es- will, intangible assets with indefi nite useful life and Available-for-sale fi nancial assets are non-derivatives include both current and non-current borrowings. Fees timated market value of similar assets (tangible assets), intangible assets not yet in use are tested for impair- that are either designated in this category or not clas- paid on the establishment of loan facilities are rec- estimate of expected cash fl ows (intangible assets such ment annually or more often if indicators of impairment sifi ed in any of the other categories. These assets are ognised as transaction costs of the loan to the extent as customer relationships) or estimate of payments exist, whereas other assets are tested for impairment carried at fair value. They are included in non-current that it is probable that some or all of the facility will be required to fulfi l an obligation (such as assumed provi- when circumstances indicate there may be a potential assets, unless the investment matures or management drawn down. In this case, the fee is deferred until the sions). impairment. intends to dispose of it within twelve months of the draw-down occurs. To the extent there is no evidence Active markets, where fair values for assets and liabil- end of the reporting period and they are reported as The determination of impairments of goodwill and that it is probable that some or all of the facility will be ities are available, exist only seldom for the acquired current assets. The Group’s investment equity securi- other intangible assets as well as property, plant and drawn down, the fee is capitalised as a pre-payment for net assets. Therefore the valuation exercise, which is ties are classifi ed to this category as they are not held equipment involves the use of estimates that include, liquidity services and amortised over the period of the based on repurchase value, expected cash fl ows or for active trading and they are non-current. Changes in but are not limited to, the cause, timing, and amount of facility to which it relates. estimated payments, requires management judgement

132 DNA ANNUAL REPORT 2018 133 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS the impairment. Impairment is based on a large number a performance obligation, revenue is recognised in standard is to increase transparency of reporting by consideration, DNA will not separate non-lease com- of factors, such as changes in current competitive the gross amount of consideration to which it expects requiring that assets and liabilities arising from a lease ponents from associated lease components and will conditions, expectations of growth in the telecommu- to be entitled in exchange for the specifi ed good or are recognised in the lessee’s balance sheet as lease report lease components and non-lease components as nications industry, increased cost of capital, technolog- service transferred. assets and as property, plant and equipment. The a single lease component. ical obsolescence, discontinuance of services, current standard includes some exemptions from recognition If DNA’s performance obligation is to arrange for those At the initial application of 1 January 2019 all right-of- replacement costs, prices paid in comparable transac- on the balance sheet in the case of short-term leases goods or services to be provided by the other party, use assets, with the exception of prepaid assets, will tions, and other changes in circumstances that indicate (12 months or less) or leases of low value. A company DNA acts as an agent (this mainly applies to value add- be recorded with an equivalent value recorded for the an impairment exists. The identifi cation of impairment can elect to use these exemptions when reporting ed or content services for mobile services). When the related lease liabilities. As a result, the Group’s proper- indicators, as well as the estimation of future cash leases. DNA Plc will use the exemption for short-term Group satisfi es a performance obligation, it recognises ty, plant and equipment and non-current liabilities will fl ows and the determination of fair values for assets (or leases. Lease payments associated with short-term revenue in the amount of any fee or commission to increase. The Group estimates that the total impact of groups of assets) require management to make signifi - leases will be recorded as an expense. which it expects to be entitled. This is the net amount IFRS 16 on the balance sheet is around EUR 84 million cant judgements concerning the identifi cation and val- of consideration that DNA retains after paying the oth- DNA Plc mostly acts as a lessee. The Group enters into increase in assets and around EUR 81 million increase idation of impairment indicators, expected cash fl ows, er party the consideration received in exchange for the agreements to lease offi ce premises, equipment facili- in liabilities. Other operating expenses in turn will applicable discount rates, useful lives, and residual val- goods or services to be provided by that party. ties and aerial sites in particular. According to current decrease, because leases will be disclosed as expenses ues. When determining the values in use for the cash accounting practices, they are classifi ed as operating and interest depreciation in the future. The EBITDA generating units, additional planning uncertainties Whether the Group is considered to be principal or lease agreements. For offi ce premises, the average eff ect in 2019 is estimated at EUR 17 million. The IFRS are factored in that refl ect the risks of macroeconom- agent in a transaction depends on analysis by man- lease period is 2 to 5 years and for equipment facilities 16 standard also has an impact on the presentation of ic development, which could adversely aff ect future agement of both the legal form and substance of the 4 to 7 years. Due to the nature of leases, the Group the consolidated statement of cash fl ows and some key results of operations. The most signifi cant assump- agreement between the Group and its business part- currently estimates that the most essential eff ects of fi gures. tions in goodwill impairment testing comprise growth ners; such judgements impact the amount of reported the adoption of the IFRS 16 standard will be related to in net sales, development of EBITDA, determination of revenue and operating expenses but do not impact net Critical judgements and material estimates at the time leased premises and equipment spaces. In addition, the discount rate (WACC), and long-term growth rate income or cash fl ows. of adoption of the standard are mainly related to the the Group has essential individual agreements relat- used after the fi ve-year forecast period. The carrying length of the lease period as well as the determination Features indicating that the Group is acting as a prin- ed to technology which have an essential impact on amount of goodwill at 31 December 2018 was EUR 327.2 of the discount rate. cipal include: responsibility for providing the goods the assets and liabilities on the balance sheet. After million (EUR 327.2 million). Further details on goodwill or services and the Group has latitude in establishing impairment testing, including a sensitivity analysis, are prices. included in note 15. IFRS 16 reconciliation 2018 Features indicating that the Group is acting as an agent Provisions include: the other party has the main responsibility for Operating lease obligations at 31 December 2018 109.9 Provisions for asset retirement obligations related to fulfi lling the contract, the Group does not have expo- equipment facilities, masts and telephone poles in use sure to signifi cant risks and rewards associated with Agreements excluding VAT 1) 88.6 and onerous contracts by DNA are determined based the sale of goods or services or the amount it earns is on the net present value (NPV) of DNA’s total estimated predetermined, being either a fi xed fee per transac- Agreements outside the scope of IFRS 16 2) -10.7 dismantling or demolition costs for asset retirement tion or a stated percentage of the amount billed to the obligations and unavoidable costs for onerous costs. customer. Short-term agreements 3) -16.8 The estimates are based on future estimated level of New standards and interpretations not yet Agreements not recognised as operating lease agreements 4) 23.9 expenses taking into account the eff ect of infl ation, adopted by the Group cost-base development and discounting. Assumptions are also used in assessing the time periods for which Certain new accounting standards and interpretations Right-of-use assets as a result of the initial application of IFRS 16 as at 1 January 2019 84.9 the asset retirement costs are incurred. Because actual have been published that are not mandatory until after outfl ows can diff er from estimates due to changes in the 1 January 2019 reporting period and have not been ) The operating lease agreements described in note 30 include VAT. The VAT amount has been excluded for reconciliation purposes. early adopted by the Group. Of these, only the follow- laws and regulations, technology, prices and condi- 2) These agreements do not fulfi l the criteria for lease agreements according to IFRS 16. This Group mainly includes agreements related to technology such as tions, and can take place many years in the future, the ing are expected to have an impact on the fi nancial IRU agreements and capacity leases. carrying amounts of provisions are regularly reviewed statements of the Group. 3) Practical expedient is used where the lease term is 12 months or less. and adjusted to take into account of any such changes. 4) Agreements not reported as operating lease agreements include agreements recognised in scope of IFRS 16 as well as prepayments earlier presented in IASB published the IFRS 16 – Leases standard on 13 non-current receivables (discounted). The discount rate applied is reviewed monthly. January 2016. It is eff ective for fi nancial periods be- Provisions recognized for future costs related to asset ginning on or after 1 January 2019. The changes mainly apply to accounting by lessees. For lessors, the situ- retirement obligations amounted to EUR 4.8 million The IFRS 16 project is proceeding according to schedule; a new system has been implemented and was deployed ation remains mostly as is. DNA will adopt IFRS 16 on at 31 December 2018 (EUR 6.1 million) and for onerous in December 2018, which means that the impact of the standard on the opening balance of 1 January 2019 can be the eff ective date of 1 January 2019 using the modifi ed contracts EUR 0.5 million at 31 December 2018 (EUR 0.7 measured in euros. million). See note 25 for more information on provi- retrospective transition method, and in accordance sions. with the IFRS 16 transition guidance, comparative infor- IFRIC 23 Uncertainty over Income Tax Treatments enters into force on 1 January 2019. The interpretation ad- mation will not be restated. dresses the recognition and measurement of current and deferred tax assets or liabilities when there is uncertain- Revenue recognition ty over income tax treatments. No material impact is expected on the Group. According to current accounting principles, the lessee Principal or agent – gross versus net presentation treats future liabilities related to leases off -balance- No other already published but not yet applied IFRS standards or IFRIC interpretations are expected to have mate- When DNA acts as a principal, it controls the good or sheet and discloses them in the notes to the fi nancial rial impact on the Group. service promised to the customer. When DNA satisfi es statements. The main objective of the new IFRS 16

134 DNA ANNUAL REPORT 2018 135 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

The following year's repayments are included in cur- and monitor the counterparty risk, investments and 3 FINANCIAL RISK MANAGEMENT rent liabilities. At balance sheet date, the average rate derivative instruments are managed by counterparty, of variable rate loans was 0.17 per cent (0.7 per cent) fi nancial instrument and maturity limits. Counterparty and variable rate loans constituted 24 per cent (24 per risk mainly relates to the cash and cash equivalents The main objectives of the Group’s treasury operations Liquidity risk cent of the Group's borrowings). of the company. DNA is not subject to any signifi cant are funding, optimising cost of capital and managing counterparty risk since cash and cash equivalents are Liquidity risk refers to situations where the Group’s fi - Borrowings from fi nancial institutions have variable fi nancing risks. Principles of risk managements are distributed to several fi nancial institutions with good nancial assets and extra funding opportunities fall short rates and bonds have fi xed rates. The coupon rate of defi ned in the Group treasury policy, approved by the credit ratings. of the Group’s requirements or the cost of raising fund- the bond maturing in March 2021 is 2.875 per cent and parent company Board of Directors. The policy in- ing is higher than the market cost.Creating cash fl ow the coupon rate for the bond maturing in March 2025 Trade receivables and contract assets cludes guidelines for raising capital, investing cash sur- forecasts and determining any related uncertainties are is 1.375 per cent. plus and managing fi nance risk. The Group treasury ac- DNA adopted the IFRS 9 Financial Instruments stand- the key measures to manage liquidity risk. At the end tivities are centralised at the parent company treasury ard on 1 January 2018. The Group’s credit position has of 2018, the Group had a strong liquidity position with Credit risk department which coordinates and monitors fi nancing not changed between IAS 39 and IFRS 9. Under IFRS cash and cash equivalents of EUR 22.7 million (EUR The Group has a large number of customers and the in the subsidiaries and reports to the Group manage- 9, DNA can apply a simplifi ed approach for expect- 23.6 million), and borrowings (non-current and current) individual receivable amounts are small, and as such ment. The Group liquidity is centralised by using Group ed credit losses from trade receivables and contract of EUR 401.9 million (EUR 327.9 million). In addition there are no major individual risks. New customers accounts and pooling systems. The parent company is assets, according to which expected credit losses are to cash and bank deposits, the Group had unused are subjected to credit check as part of the ordering responsible for investing the surplus liquidity as well as measured for impairment purposes at an amount equal credit facilities and other committed credit facilities process, and if any existing customers are found to managing the Group’s external funding requirements. to lifetime expected credit losses. of EUR 165.0 million (EUR 165.0 million). In addition, have credit problems, unsecured new sales are not Any fi nance defi cit in the subsidiaries will be fi nanced the company has a commercial paper programme of made. In 2018, the impairment loss of trade receiv- For the purpose of determining expected credit loss- through internal loans within the Group. EUR 150.0 million (EUR 150.0 million), under which EUR ables totalled EUR 3.9 million (EUR 2.3 million).The es, trade receivables and contract assets have been The main fi nancial risks in the Group are liquidity, 50.0 million (EUR 20.0 million) was drawn by the end maximum exposure to credit risk at the reporting date grouped based on their credit risk characteristics and credit and interest rate risk. The objective of the Group of December. The unused credit facilities totalled EUR is the carrying value of fi nancial assets. Customer with historical loss rates. Contract assets are included in fi nancing risk management is to identify and measure 265.0 million (EUR 295.0 million). The Group’s cash and weaker solvency are required to pay the basic charges non-invoiced items, and their risk characteristics are the total risk position created by the Group fi nancing bank deposits and undrawn committed credit facilities in advance as a deposit. Counterparty risk refers to similar to trade receivables from similar types of con- operations and to carry out risk management measures amounted to EUR 187.7 million (EUR 188.6 million). The a situation where the other party fails to meet its tracts. to ensure that the total fi nancing risk will not exceed credit facility of EUR 150 million matures in October obligations under the fi nancing agreement. To restrict the Group risk-bearing capacity and objectives. The 2021. Planned repayments in 2019 total EUR 3.8 million without the commercial paper programmes. Group’s currency risk is not material since its opera- The age distribution of outstanding trade receivables is shown in the following table. 2018 fi gures are presented tions are mainly carried out in Finland. according to IFRS 9 and fi gures from 2017 according to IAS 39.

EUR in thousands 2018 2017 DEBT MATURITY ANALYSIS Undue trade receivables 187,377 167,800 2018 Less than 1 year 1-5 years over 5 years Total Total Trade receivables 1-45 days overdue 9,328 9,042

Interest Repay- Interest Repay- Interest Repay- Interest Repay- Cash Trade receivables 46-90 days overdue 1,024 1,061 EUR in thousands payment ment payment ment payment ment payment ment fl ow Trade receivables 91-180 days overdue 1,395 1,430 Borrowings (excl. 5,247 53,837 17,412 90,769 6,913 265,385 29,572 409,991 439,563 fi nance lease Trade receivables more than 180 days overdue 1,912 1,832 liabilities) Total 201,037 181,164 Trade payables - 111,275 - - - - - 111,275 111,275

2017 Less than 1 year 1-5 years over 5 years Total Total Interest rate risk Interest Repay- Interest Repay- Interest Repay- Interest Repay- Cash The Group’s interest rate risk primarily comprises in- derivatives. At 31 December 2018, DNA did not hedge EUR in thousands payment ment payment ment payment ment payment ment fl ow terest rate sensitivity of fi nancial items, referring to the any of its borrowings (31.12.2017 hedged 0%). At the direct eff ect of changes in the interest rate level on fi - end of 2018, the Group had no interest rate derivatives Borrowings (excl. 7,311 155,234 13,065 173,810 - - 20,376 329,043 349,419 nancial items, mainly borrowings, and historically also (EUR 0 million). derivative instruments. DNA’s interest rate risk arises fi nance lease Borrowings issued at fi xed rates, mainly the fi xed rate from borrowings that are issued at fl oating rates and liabilities) bonds, expose the Group to fair value interest rate risk. expose DNA to cash fl ow interest rate risk. To manage As at 31 December 2018, 76 per cent of DNA’s borrow- its interest rate risk, the Group may use interest rate Trade payables - 116,462 - - - - - 116,462 116,462 ings were fi xed rate (76 per cent).

136 DNA ANNUAL REPORT 2018 137 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

If interest rates had been one percentage point higher, Capital management with all other variables held constant, the calculated 4 SEGMENT INFORMATION The capital structure can be infl uenced for example post-tax result would have been EUR 0.6 million (EUR through dividend distribution, repayment of capital and 0.4 million) lower and, with the corresponding de- planning the cash outfl ows for investments. The Group crease in interest rates, the calculated post-tax result The Group's operations are managed and reported The primary key indicators for the segments' result management monitors the development of the capital would have been EUR 0.6 million (EUR 0.4 million) according to the following business segments: monitoring comprise net sales, EBITDA and operating structure for example on the basis of the gearing and higher. The sensitivity analysis covers the Group’s vari- result. Items not allocated to segments include fi nance equity ratios as well as the net debt to EBITDA ratio. DNA's Consumer segment off ers consumers diverse able-rate loans, cash and cash equivalents. items, share of associates’ results and income tax The Group’s credit facility agreements include fi nancial telecommunication services such as communication, expense. The sensitivity of the fair value of hedge accounting in- covenants requiring an equity ratio of at least 35 per information, safety and entertainment, including mo- terest rate swaps to changes had zero eff ect on equity cent and net debt to EBITDA ratio below 3.50:1. These bile phones and mobile phone subscriptions, broad- The DNA Group operates in Finland, domestic opera- because the company had no active interest rate swaps conditions have been met during the fi nancial periods. band (mobile and fi xed), data security services, TV tions accounting for a majority of its net sales. In 2018, at the end of 2017 and 2018. The equity ratio on the balance sheet date was 46.9 per services from connections to channel packages as well foreign operations accounted for EUR 22.0 million (2017 cent (50.6 per cent) and net debt to EBITDA ratio was fi xed telephone connections. EUR 20.9 million). 1.33:1 (1.12:1). DNA’s Corporate segment off ers companies and com- As the products and services of the Group's extensive munities nationwide, standardised and easy-to-use portfolio are targeted at the mass market, the Group is communication and data network solutions, including not dependent on any single customer. SMS, telecommunication and voice services, comprehensive solutions as well as services to domestic and international teleoperators.

1 Jan-31 Dec 2018 FINANCIAL INSTRUMENTS BY CLASS EUR in thousands Consumer Corporate Group Financial assets 2018 2017 Business segments segment segment Unallocated total

Financial assets recognised at amortised cost Net sales 684,919 226,838 911,758

Trade receivabes 201,037 181,164 EBITDA 218,764 66,156 284,921

Other fi nancial assets recognised at amortised cost 46,057 - Depreciation, amortisation and impairments 95,049 50,974 146,023

Loans and other receivables - 37,255 Operating result, EBIT 123,716 15,182 138,898

Cash and cash equivalents 22,654 23,592 Net fi nance items −11,177 −11,177

Financial assets recognised at fair value through other Share of associates’ result 14 14 comprehensive income 117 - Result before income tax 127,736 Available-for-sale fi nancial assets - 117 Net result for the period 102,234 Financial assets recognised at fair value through profi t or loss - - Capital expenditure* 92,867 45,404 138,271 Total 269,865 242,128 Employees at end of year 913 677 1,590

Financial liabilities

Financial liabilities recognised at amortised cost

Trade and other payables 182,463 144,322

Borrowings 401,927 327,880

Total 584,390 472,202

1) Prepayments are excluded from trade and other receivables as they do not represent fi nancial instruments 2) 2018 fi gures are presented according to IFRS 9 and fi gures from 2017 according to IAS 39. 3) Trade and other payables do not include items other than fi nancial liabilities because this analysis is only required for fi nancial instruments.

138 DNA ANNUAL REPORT 2018 139 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

1 Jan-31 Dec 2017 Mobile communication services comprise service reve- Liabilities related to contracts with nue, mobile network voice services, mobile broadband customers EUR in thousands services, M2M services and mobile virtual network The following table shows how much of the revenue Consumer Corporate Group operator (MVNO) services. Mobile device revenue Business segments segment segment Unallocated total recognised in the current reporting period relates to comprises the sales of mobile devices such as mobile carried – forward liabilities. phones, tablets and dongles. Mobile interconnec- Net sales 658,680 227,409 886,088 tion and roaming revenue comprises interconnection EUR in thousands 2018 EBITDA 199,752 72,020 271,772 revenue, which DNA receives for calls made by other operators’ clients to DNA’s network, and roaming Revenue recognised that was inclu- Depreciation, amortisation and impairments 95,181 53,068 148,249 revenue, which DNA receives from other operators for ded in the contract liability balance calls made by foreign mobile operators’ subscribers in at the beginning of the period 2,762 Operating result, EBIT 104,571 18,952 123,523 Finland. Fixed-network revenue for services other than voice services comprises fi xed broadband and data Net fi nance items −9,368 −9,368 Management expects that 58 per cent of the transac- services, TV and video services, corporate network tion price allocated to the unsatisfi ed contracts as of 31 value added services as well as the sales of network Share of associates’ result 4 4 December 2018 will be recognised as revenue during equipment (e.g. PBX and LAN/WLAN equipment). the next reporting period (EUR 2.3 million). The re- Result before income tax 114,158 Fixed-network voice services include all fi xed-network maining 42 per cent (EUR 1.7 million) will be recognised voice services and related devices. Net result for the period 93,086 during 2020 or later. Assets and liabilities related to contracts The fi gure above does not include variable considera- Capital expenditure* 96,937 43,403 3,678 144,018 with customers tion, which is constrained. DNA has recognised the followoing contract assets Employees at end of year 942 659 1,601 All other contracts are for periods of one year or less or related to revenue. Contract assets include deferred are billed based on time incurred. As permitted under discounts. Discounts are recognised evenly throughout * Capital expenditure comprise additions to intangible and tangible assets, excluding business combinations, and additions relating to fi nance IFRS 15, the transaction price allocated to these unsat- lease agreements and decommissioning obligations. Additionally, capital expenditure include annual cash instalments for capitalised spectrum the contract period. licenses. Unallocated capital expenditure comprise sales commissions. isfi ed contracts is not disclosed. EUR in thousands 2018 Assets recognised from costs to obtain a The primary key indicators for the segments' profi t and ure, which should not be viewed in isolation or as a contract Contract asset 1,076 loss monitoring comprise net sales, EBITDA and op- substitute to the equivalent IFRS fi nancial measures. In addition to the contract balances disclosed above, erating result. The company believes that the EBITDA EBITDA should not be considered as an alternative to Loss allowance −10 DNA has also recognised an asset in relation to costs measure provides meaningful supplemental informa- (a) operating result or net result for the period as a to obtain a contract. The asset is recognised as a cost tion to the company management and the readers of measure of operating performance, (b) cash fl ows from Total contract assets 1,066 throughout the contract period consistent with the its fi nancial statements by excluding items that may operating, investing or fi nancing activities as a meas- pattern of recongition of the associated revenue. not be indicative of the company’s operating result or ure of the company’s ability to meet its cash needs or DNA has recognised the following contract liabilities cash fl ows. (c) any other IFRS fi nancial measures, or as a measure related to revenue. The debt includes activation and EUR in thousands 2018 of performance or liquidity. EBITDA is not prepared in accordance with IFRS and connection fees as well as adjustments to subscription is therefore considered a non-IFRS fi nancial meas- and device bundles as a result of the allocation of sepa- Asset recognised from costs incurred to obtain a contract at 31 December 61,181 rate performance obligations on the basis of their relative standalone selling prices. Under the new guidance, Costs recognised throught profi t and 5 REVENUE FROM CONTRACTS WITH activation and connection fees are recognised during loss during the period´ 28,441 CUSTOMERS the contract period. EUR in thousands 2018 The group revenue consists of income from contracts with customers. The Consumer segment revenue in 2018 EUR in thousands 2017 was EUR 684.9 million and the Corporate segment revenue was EUR 226.8 million. Segment revenue is derived Contract liabilities 5,122 from the transfer of goods and services in the following product lines over time and at a point in time: Sale of goods 127,675

Mobile in- Revenue from services 758,302 Mobile terconnection Signifi cant changes in contract assets and Service Mobile and Inbound Fixed non- Fixed liabilities Revenue from construction contracts 112 EUR in thousands Revenue Equipment Roaming voice Voice Total Contract assets have decreased EUR 1.1. million due to changes in discount types. Contract assets amounted Total 886,088 Timing of revenue recognition to EUR 2.1 million at 1 January 2018. At the end of the year, the aggregate costs incurred Point in time - 133,646 - 12,877 81 146,604 Contract liabilities have increased EUR 0.6 million. The and recognised profi ts from construction contracts increase is mainly due to higher mobile service-mobile Over time 454,427 - 51,495 235,269 23,964 765,154 in progress (less recognised losses) totalled EUR 1.6 equipment bundle sales. million. Advance payments in relation to construction Total 454,427 133,646 51,495 248,146 24,045 911,758 contracts were EUR 0.0 million.

140 DNA ANNUAL REPORT 2018 141 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

6 OTHER OPERATING INCOME 8 DEPRECIATION, AMORTISATION AND IMPAIRMENT EUR in thousands 2018 2017

Net gain on sale of non-current assets 354 75 EUR in thousands 2018 2017

Rental income 3,072 3,281 Depreciation and amortisation charges per category

Other income 378 821

Total 3,804 4,177 Intangible assets

Customer base 4,126 5,307

Brand 995 942

Other intangible assets 32,178 32,734

7 OTHER OPERATING EXPENSES Total 37,299 38,983

EUR in thousands 2018 2017 Property, plant and equipment Maintenance expenses 41,282 39,491 Buildings and constructions 6,097 6,481 Rental expenses 40,920 37,737 Machinery and equipment 102,627 99,728 External services 5,719 6,685 Total 108,724 106,209 Other expenses 36,671 34,331

Total 124,592 118,244 Impairment charges per category

EUR in thousands

AUDITOR FEES Intangible assets Other intangible assets* - 3,057 EUR in thousands 2018 2017 Total - 3,057 PricewaterhouseCoopers Oy

Audit fees 279 265 Total depreciation, amortisation and impairment 146,023 148,249 Actions referred to in Section 1.1.2 of the Finnish Auditing Act 7 7

Tax services 24 66

Other services 70 137 *Impairment of data system

Total 380 475

The above contains the fees to the audit fi rm elected by the Annual General Meeting.

142 DNA ANNUAL REPORT 2018 143 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

9 EMPLOYMENT BENEFIT EXPENSES 12 INCOME TAX EXPENSE

EUR in thousands 2018 2017 EUR in thousands 2018 2017

Wages and salaries 85,292 84,113 Income tax, current year −22,868 −17,722

Pension expenses – defi ned contribution plan 16,142 15,525 Income tax, previous years −4 −27

Pension expenses – defi ned benefi t plan −33 −8 Change in deferred tax −2,630 −3,323

Share-based payments 2,719 8,024 Total −25,502 −21,072

Other personnel expenses 3,268 3,402

Total 107,388 111,055

Reconciliation of the income tax expense and the taxes calculated at the Finnish tax rate: NUMBER OF PERSONNEL, AVERAGE

Net result before tax 127,736 114,158 Consumer business 932 971 Income tax at Finnish tax rate 20 per cent −25,547 −22,832 Corporate business 673 668 Tax eff ects of: Total 1,605 1,639 Income not subject to tax 4 12

Retroactive tax benefi t associated with share-based compansation 1,890 Key management compensations are presented in note 32 Related party transactions. Non-deductible expenses −25 −169

Income taxes from previous years −4 −27 10 FINANCE INCOME Diff erent tax rate of subsidiary −5 Share of associates’ results net of tax 3 1 2018 2017 EUR in thousands Additional deductible expenses 67 59 518 884 Interest income from receivables Tax charge −25,502 −21,072 Dividend income on other investments 6 4

Total 523 889

11 FINANCE EXPENSE

EUR in thousands 2018 2017

Interest expense 8,821 8,686

Other fi nancial expenses 1) 2,879 1,571

Total 11,700 10,257

1) Other fi nancial expenses include a one-time fi nancial cost of EUR 2.1 million due to re-fi nancing of bonds.

144 DNA ANNUAL REPORT 2018 145 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

13 EARNINGS PER SHARE 14 PROPERTY, PLANT AND EQUIPMENT

Basic earnings per share is calculated by dividing the ings per share adjusted for dilution eff ect is calculated Prepay- net result attributable to owners of the parent for the by including the potential dilution eff ect of the option Buildings Machi- ments and fi nancial period, by the weighted average number of scheme and the share-based reward plan. Land and nery and non-current outstanding shares during the fi nancial period. Earn- and construc- equip- assets under EUR in thousands water tions ment construction Total

31 December 2016

Cost 713 43,376 1,373,153 62,243 1,479,485 EUR in thousands 2018 2017 Accumulated depreciation - −24,349 −1,028,010 - −1,052,360 Net result attributable to owners of the parent, (EUR 1,000) 102,234 93,086 Net book amount 713 19,028 345,142 62,243 427,126

Weighted average number of shares Year ended 31 December 2017 (thousands)* 132,039 131,923 Opening net book amount 713 19,028 345,142 62,243 427,126 Basic earnings per share (EUR/share) 0.77 0.71 Additions and transfers - 4,208 95,128 1,352 100,688

Eff ect of the share-based reward plan (1,000) 112 43 Disposals - - −210 - −210

Weighted average number of shares for the Accumulated depreciation relating purpose of calculating EPS adjusted for dilution to disposals - - 186 - 186 (thousands) 132,151 131,965 Depreciation charge - −6,481 −99,728 - −106,209 Earnings per share adjusted for dilution eff ect (EUR/share) 0.77 0.71 Closing net book amount 713 16,754 340,517 63,596 421,580

31 December 2017

Cost 713 47,584 1,468,071 63,595 1,579,963

Accumulated depreciation - −30,830 −1,127,553 - −1,158,383

Net book amount 713 16,754 340,517 63,596 421,580

Year ended 31 December 2018

Opening net book amount 713 16,754 340,517 63,596 421,580

Additions and transfers - 5,255 111,524 −17,006 99,773

Disposals - −3 −959 - −961

Accumulated depreciation relating to disposals - 1 882 - 883

Depreciation charge - −6,097 −102,627 - −108,724

Closing net book amount 713 15,910 349,338 46,590 412,550

31 December 2018

Cost 713 52,840 1,578,632 46,590 1,678,775

Accumulated depreciation - −36,930 −1,229,294 - −1,266,224

Net book amount 713 15,910 349,338 46,590 412,550

146 DNA ANNUAL REPORT 2018 147 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS Prepay- ments and Other non-current Total Customer intangible assets under intangible 15 INTANGIBLE ASSETS AND EUR in thousands Goodwill base Brand assets construction assets

Closing net book amount 327,206 54,277 21,372 89,153 8,893 500,901 IMPAIRMENT TESTING Prepay- ments and Opening net book amount 327,206 54,277 21,372 89,153 8,893 500,901 Other non-current Total Customer intangible assets under intangible Additions and transfers - - - 35,403 19,984 55,387 EUR in thousands Goodwill base Brand assets construction assets Amortisation charge - −4,126 −995 −32,178 - −37,299 31 December 2016 Closing net book amount 327,206 50,151 20,377 92,379 28,876 518,989 Cost 431,685 130,475 41,819 379,587 35,983 1,019,550 31 December 2018 Accumulated amortisation and impairment −70,892 −19,505 −310,313 - −505,190 −104,479 Cost 431,685 130,475 41,819 426,764 31,933 1,062,676 Net book amount 59,583 22,314 69,273 35,983 514,359 327,206 Accumulated amortisation and impairment −104,479 −80,324 −21,442 −334,385 −3,057 −543,687 Year ended 31 December 2017 Net book amount 327,206 50,151 20,377 92,379 28,876 518,989 Opening net book amount 327,206 59,583 22,314 69,273 35,983 514,359

Additions and transfers - - - 56,990 −24,034 32,956

Disposals - - - −30,044 - −30,044

Accumulated amortisation relating to disposals - - - 30,044 - 30,044

Amortisation charge - −5,307 −942 −32,734 - −38,983

Impairment - - - - −3,057 −3,057 Goodwill allocation Goodwill is allocated to DNA’s cash-generating units as follows: Closing net book amount 327,206 54,277 21,372 93,529 8,893 505,276

31 December 2017 EUR in thousands 2018 2017

Cost 431,685 130,475 41,819 406,533 11,949 1,022,462 Consumer segment 180,723 180,723

Accumulated amortisation and Corporate segment 146,483 146,483 impairment −104,479 −76,198 −20,447 −313,003 −3,057 −517,187 Total 327,206 327,206 Net book amount 327,206 54,277 21,372 93,529 8,893 505,276

Year ended 31 December 2018

Opening net book amount 431,685 130,475 41,819 406,533 11,949 1,022,462

Changes in accounting policy IFRS 15 - - - −15,171 - −15,171

Opening net book amount 431,685 130,475 41,819 391,362 11,949 1,007,291

Accumulated amortisation −104,479 −76,198 −20,447 −313,003 −3,057 −517,187 and impairment

Accumulated amortisation - - - 10,796 - 10,796 and impairment - changes in accounting policy IFRS 15

Accumulated amortisation −104,479 −76,198 −20,447 −302,207 −3,057 −506,389 and impairment

148 DNA ANNUAL REPORT 2018 149 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

Impairment testing The growth rate forecasted after fi ve years was de- The table below illustrates the change in percentage points for the key forecacast parameters before the fair value pending on the segment 0.9 - 2.0 per cent. falls below the carrying value (and other parameters remaining unchanged). In order to carry out impairment testing, goodwill is allocated to cash-generating units (CGUs) in accordance The impairment test indicated that the recoverable with DNA’s business organisation. The balance sheet amounts of the CGUs exceeded their balance sheet values of all CGUs are subjected to an annual impair- values and their goodwill have not been impaired. The Consumer Corporate assumptions used are based on management's best ment testing. Apart from goodwill, the Group does segment segment not have any other intangible assets with an unlimited judgement based on the information available at the useful life. The recoverable amount (the higher of an publication of the fi nancial statements. Sensitivity analysis of forecast parameters 2018 2018 asset’s fair value less costs to sell and its value in use) The key assumptions used were growth in net sales, Average EBITDA, % of net sales −9.4 −5.3 of each CGU is defi ned as the value in use according to development of profi tability, weighted average cost of the projected discounted cash fl ows (the DCF method). capital (WACC) as well as the cash fl ow growth rate WACC, % 12.9 3.7 Cash fl ow projections are based on the plans approved after the fi ve-year forecast period. The major sensitivi- by management, covering a fi ve-year period. Manage- ties in the result are associated with the forecasted net ment considers the projections to refl ect development sales and levels of profi tability. Applied parameters 2017 to date and other information available from external Consumer Corporate sources. The (before tax) discount rate (weighted aver- segment segment age cost of capital, WACC) used in testing represents Applied forecast parameters 2017 2017 7.0-7.4 per cent depending on the segment. Average growth in net sales, %* 0.9 2.5

APPLIED PARAMETERS USED INIMPAIRMENT TESTING AND Average operating margin, % * 32.2 33.0 SENSITIVITY ANALYSIS Average investment, % of net sales * 14.4 18.6 Applied parameters 2018 Growth after the forecast period, % 0.9 2.0 Consumer Corporate segment segment WACC, % 7.7 7.3 Applied forecast parameters 2018 2018 Amount of headroom, EUR million 1,224 380 Average growth in net sales, %* 2.3 2.4

Average operating margin, % * 33.9 31.7 * Five-year forecast period average

Average investment, % of net sales * 18.0 21.1

Growth after the forecast period, % 0.9 2.0 The table below illustrates the change in percentage points for the key forecast parameters before the fair value falls below the carrying value (and other parameters remaining unchanged). WACC, % 7.4 7.0

Amount of headroom, EUR million 1,073 260 Consumer Corporate segment segment

* Five-year forecast period average Sensitivity analysis of forecast parameters 2017 2017

Average EBITDA, % of net sales −12.3 −8.3

WACC, % 16.0 6.0

150 DNA ANNUAL REPORT 2018 151 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

16 INVESTMENTS IN ASSOCIATES INTEREST IN JOINT ARRANGEMENT

Group EUR in thousands 2018 2017 holding

1 January 1,199 1,199 Suomen Yhteisverkko Oy 49%

Share of the result for the fi nancial period 10 - The joint arrangement was established in 2014 and is DNA recognised its share of 47 per cent (2017: 46 per 1,209 1,199 31 December classifi ed as a joint operation. The contractual arrange- cent) of assets, liabilities, revenues and expenses in its ment establishes the parties’ rights to the assets and consolidated fi nancial statements. obligations for liabilities, relating to the arrangement, There was no goodwill related to the carrying value of associated companies in 2018 and 2017. and the parties’ rights to the corresponding revenues and obligations for the corresponding expenses. Financial information on the Group's associates, including assets, liabilities, net sales as well as the Group’s share of the results.

EUR in thousands Net Share Group 2018 Domicile Assets Liabilities sales of result holding 17 OTHER INVESTMENTS Suomen Numerot Numpac Oy Helsinki 687 149 1,807 14 33%

Kiinteistö Oy Otavankatu 3 Pori 2,915 149 316 - 36% EUR in thousands 2018 2017

Kiinteistö Oy Siilinjärven Toritie Siilinjärvi 321 3 41 - 38% Shares in non-listed companies 117 117 Total 117 117

Net Share Group 2017 Domicile Assets Liabilities sales of result holding The Group has chosen a method under which the fair value of items previously classifi ed as available-for-sale fi nancial assets is recognised through profi t and loss or other comprehensive income, because these investments are considered to be long-term strategic investments that are not expected to be sold in the short or medium term. Suomen Numerot Numpac Oy Helsinki 779 272 1,619 4 33%

Kiinteistö Oy Otavankatu 3 Pori 2,919 203 299 - 36%

Kiinteistö Oy Siilinjärven Toritie Siilinjärvi 319 3 28 - 38%

152 DNA ANNUAL REPORT 2018 153 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

MOVEMENTS IN THE PROVISION FOR IMPAIRMENT OF TRADE RECEIVABLES AND 18 TRADE AND OTHER RECEIVABLES CONTRACT ASSETS ARE AS FOLLOWS:

EUR in thousands 2018 2017 Contract assets Trade receivables

Non-current receivables 2018 2018 2017 - 37,795 33,604 Trade receivables 31 December - calculated under IAS 39 - 5,582 5,774 1) 37,082 3,528 Prepaid expenses Amounts restated through opening retained earnings 20 928 Contract assets 104 - Opening loss allowance as at 1 January 2018 - 1,045 1,337 Other non-current receivables calculated under IFRS 9 20 6,510 5,774 76,026 38,468 Total non-current receivables Increase in loss allowance recognised in profi t or loss during the year −10 4,018 2,288

Receivables written off during the year as Current receivables uncollectible - −3,440 −2,480 201,037 181,164 Trade receivables At 31 December 10 7,088 5,582 Prepaid expenses 1) 41,186 13,230

Income tax receivables 962 -

Other current receivables 1,439 1,168

Total 244,624 195,562

In non-current and current assets, the main impacts of IFRS 15 are due to the deferral of sales and agent commissions. Previously, agent commissions of certain fi xed-term contracts have been recognised as intangible assets. The new deferral method of commission costs according to IFRS 15 increases receivables. In addition to the deferral of these costs, trade and other receivables include receivables according to IFRS 15 due to the new deferral method of revenue. The main impact of deferral on receivables is related to discounts.

1) Prepaid expenses mainly consist of: IFRS 15 accrued costs EUR 61,2 million, prepaid production rental invoices, prepayments for IT-support and other prepaid trade payables EUR 13.0 million (EUR 12.3 million), TyEL pension prepayment EUR 0.0 million (EUR 1.2 million) and other prepayments EUR 4.1 million (EUR 3.2 million).

During 2018, the Group has recognised an impairment loss on trade receivables of EUR 4.0 million (EUR 2.3 million). Impairment is recognised on receivables older than 180 days. Non-current receivables are measured at fair value. Fair value of receivables corresponds to book value as the eff ect of discounting is not material considering the maturity.

154 DNA ANNUAL REPORT 2018 155 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

19 DEFERRED TAX ASSETS AND LIABILITIES

Recog- Recog- nised in Recog- Other nised in other com- Recog- nised in compre- the income prehensive nised in 31 the income hensive 31 EUR in thousands 1 January statement income equity December EUR in thousands 1 January statement income December

Deferred tax assets 2018 Deferred tax assets 2017

Provisions 1,476 −288 −62 - 1,126 Provisions 2,392 −897 −18 1,476

Group eliminations 1,201 −1,201 - - - Finance lease agreements 255 −255 - 0

Tax losses 116 −116 - - - Group eliminations 3,622 −2,421 - 1,201

Unused taxable depreciation 2,426 −405 - - 2,021 Tax losses 287 −171 - 116

Other temporary diff erences 3,257 374 - 913 4,544 Unused taxable depreciation 4,121 −1,695 - 2,426

Total 8,475 −1,636 −62 913 7,6 91 Other temporary diff erences 4,029 −772 - 3,257

Total 14,704 −6,211 −18 8,475 Recog- Recog- nised in nised in other com- Recog- the income prehensive nised in 31 Recog- Other EUR in thousands 1 January statement income equity December nised in compre- the income hensive 31 Deferred tax liabilities 2018 EUR in thousands 1 January statement income December

Fair value of assets through - - Deferred tax liabilities 2017 business combinations 18,383 −1,955 16,428 Fair value of assets through 20,683 −2,299 - 18,383 Accelerated depreciation 315 1,120 - 7 1,442 business combinations

Other temporary diff erences 4,085 1,828 - 11,042 16,955 Accelerated depreciation 306 9 - 315

Total 22,783 993 - 11,049 34,825 Other temporary diff erences 4,682 −597 - 4,085

Total 25,671 −2,887 - 22,783

156 DNA ANNUAL REPORT 2018 157 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

DNA Plc has one type of share. The total number of Reserve for invested unrestricted equity 20 INVENTORIES shares is 132,303,500 (132,303,500). The number of The reserve for invested unrestricted equity includes outstanding shares is 132,120,711 (132,303,500). The other equity type investments and the subscription shares do not have a nominal value. On 31 Decem- price of shares insofar as it has not been expressly EUR in thousands 2018 2017 ber 2018, DNA Plc’s share capital amounted to EUR recognised in the share capital. 72,702,226. All issued shares have been paid in full. Materials and supplies 31,681 22,909 Change in the classifi cation of unrestricted Dividends Total 31,681 22,909 equity DNA Plc's Annual General Meeting of 22 March 2018 approved a payment of dividend (EUR 0.46 per share) DNA’s AGM of 22 March 2018 made a decision to as well as a capital payment from the reserve for change the classifi cation of unrestricted equity. In invested unrestricted equity (EUR 0.17 per share). Also, During the reporting period, an expense of EUR 141.4 million (EUR 126.6 million) was recognised in the income previous years, the company had, when repurchasing the AGM approved an additional capital payment statement for materials and supplies. its own shares, recorded the subscription price of own from the reserve for invested unrestricted equity (EUR shares in a way that reduced the amounts of retained 0.47 per share). In total, paid dividends and capital earnings of previous fi nancial periods. This has been payments amounted to EUR 1.10 per share or EUR in accordance with previously made decisions as well 145,332,782.10. The dividend was paid on 4 April 2018. as the Finnish Limited Liability Companies Act, but it does not fully allow for the opportunity provided for in Treasury shares the Act to present funds invested in the company and Based on the Board of Directors' decision, DNA Plc has 21 CASH AND CASH EQUIVALENTS profi ts from business operations separately. 1 March 2018 transferred 82,028 company's treasury According to the decision of the AGM, EUR shares to persons belonging to the share-based remu- EUR in thousands 2018 2017 62,420,161.66 was transferred from the reserve of neration scheme, Bridge Plan 2017 for the performance invested unrestricted equity to retained earnings from period 2017, as settlement in accordance with the plan Cash and cash equivalents 22,654 23,592 previous fi nancial periods. rules.

Total 22,654 23,592 This change has no eff ect on the total amount of unre- After the transfer, DNA holds a total of 182,789 treasury stricted equity. shares.

22 EQUITY Acquisition cost EUR in thousands Number of shares (EUR in thousands)

1.1.2017 0 Total Reserve for Shares Treasury number invested Treasury share acquisition 967,897 14,035 outstanding shares of shares Share unrestricted EUR in thousands (thousands) (thousands) (thousands) capital equity Share issue through share-based payment −703,080

1 January 2017 132,304 - 132,304 72,702 652,719 31.12.2017 264,817

Direct costs relating to share issue - - - - 337 Share issue through share-based payment −82,028

Treasury share acquisition −968 968 - - - 31.12.2018 182,789

Share based payment 703 −703 - - -

31 December 2017 132,039 265 132,304 72,702 653,056 Parent company DNA Plc's distributable funds as at 31 December 2018

Share based payment 82 −82 - - - EUR in thousands 31 December 2018 Reclassifi cation - - - - −62,420 Treasury shares −2,806 Capital payment - - - - −84,557 Retained earnings 67,338 31 December 2018 132,121 183 132,304 72,702 506,079 Net result for the period 89,225

Total distributable funds 153,758

158 DNA ANNUAL REPORT 2018 159 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

will be paid as shares). Any rewards based on the restriction period, after which the shares allocated in 23 SHARE-BASED PAYMENTS programme will be distributed in the spring of 2019, if the beginning of each respective programme are paid the performance targets set by the Board of Directors to the participants, provided that their employment are achieved. Shares received as a reward cannot be with DNA continues until the payment of the rewards. gramme has around 50 participants, and the maximum Long-term share-based incentive scheme transferred during the two-year restriction period after The start of each new programme requires a separate number of shares to be distributed will be 372,600 (the for senior management and other key the vesting period. decision by the Board of Directors. employees gross amount from which the applicable withholding tax will be deduced, and the remaining net amount will The restricted share-based reward system The RSP 2018-2020 share-based reward programme DNA's Board of Directors decides to continue the long- began in early 2018, and the rewards earned will be dis- be paid as shares). The restricted share-based reward system can be used term incentive plans for senior executives and other tributed in the spring of 2021. The RSP typically applies The programme PSP 2019-2021 starts at the beginning as a complementary tool for committing employees in key employees. to only a few individuals per year. The maximum num- of 2019. Any share-based rewards earned through it specifi c situations, such as during acquisitions and re- The purpose of the long-term incentive system is to ber of shares to be distributed under the programme will be paid in the spring of 2022. The performance cruitment. The Restricted Share Plan consists of share- harmonise shareholders' and senior executives' goals in will be 45,000 (gross amount from which applicable targets applied to the programme are DNA's EBITDA based incentive programmes that begin every year. order to increase DNA's value, and to commit execu- withholding tax will be deduced, and the remaining net development over the period 2019-2021 and DNA's Rewards have not yet been awarded in the share-based tives and other key employees to DNA by off ering them amount will be paid as shares). total shareholder return compared to a peer group over reward system. Each program consists of a three-year a competitive, long-term reward plan in the company. the period 2019-2021. The programme has around 70 The system mainly consists of a Performance Share participants, and the maximum number of shares to Plan (PSP), which is complemented by a separate be distributed will be 382,158 (the gross amount from share-based Bridge Plan. In addition, DNA has a Re- which the applicable withholding tax will be deduced, Share-based reward plan PSP 2018–2020 Bridge plan 2018 PSP 2017–2019 Bridge plan 2017 stricted Share Plan (RSP). and the remaining net amount will be paid as shares). The Performance Share Plan The Bridge Plan Grant date 17 January 2018 17 January 2018 15 February 2017 15 February 2017 The Performance Share Plan consists of separate, The Bridge Plan for the transition period consists of Maximum number of shares 372,600 115,900 471,000 157,300 share-based reward programmes that begin annually. two, three-year-long share-based reward programmes. Each programme has a three-year vesting period. The These programmes have a year-long vesting period Fair value of the reward at grant 6.12 6.28 start of each new programme requires a separate deci- and a two-year restriction period. The fi rst programme date sion by the Board of Directors. began in 2017. Share-based rewards based on the 2017 Share price at grant date 15.07 15.07 11.36 11.36 programme were handed out in the spring of 2018, The fi rst programme (PSP 2017) started at the begin- because the performance targets set by the Board of 31 December 2020 31 December 2019 ning of 2017. Any share-based rewards earned through Valid until 31 December 2020 31 December 2019 Directors were reached (EBITDA and EBITDA margin it will be paid in the spring of 2020, if the performance among others). Shares received as a reward cannot be Expected volatility of share 19% 23% targets set by the Board of Directors are reached. transferred during a two-year restriction period after prices The fi rst programme will be built on the following per- the vesting period. Expected dividends 3.12 1.02 0.63-0.75 formance targets: DNA’s total shareholder return (TSR) The performance targets applicable to the share- compared to a peer group over the period 2017–2019, based reward system during the transition period are Risk-free interest rate −0.29% -0.82%-0.74% and DNA’s cumulative cash fl ow in 2017–2019. The based on DNA’s key strategic objectives for the vesting fi rst programme has about 50 participants, and the 3 years 3 years 3 years 3 years periods in question. The fi rst programme has about 50 Expected life maximum number of shares to be handed out will be participants, and the maximum number of shares to be 471,000 (gross amount from which applicable with- Implementation As shares and cash As shares and cash As shares and cash As shares and cash handed out will be 157,300 (gross amount from which holding tax will be deduced, and the remaining net applicable withholding tax will be deducted, and the amount will be paid as shares). remaining net amount will be paid as shares). The second programme PSP 2018-2020 started at the The performance targets applicable to the share- beginning of 2018. Any share-based rewards earned based reward programme, the Bridge Plan 2018, through it will be paid in the spring of 2021, if the which began in January 2018, are based on DNA's key performance targets set by the Board of Directors strategic objectives for the vesting period in question. are achieved. The performance targets applied to the The programme has around 50 participants, and the programme are DNA's total shareholder return (TSR) maximum number of shares to be handed out will be compared to a peer group over the period 2018-2020, 115,900 (gross amount from which applicable withhold- and DNA's cumulative cash fl ow in 2018-2020. The pro- ing tax will be deduced, and the remaining net amount

160 DNA ANNUAL REPORT 2018 161 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

The fair value of the PSP 2017-2019 reward at grant Based on the Board of Directors' decision, DNA Plc has The liability recognised in the balance sheet for the defi ned benefi t plans is determined as follows: date was 6.28. The fair value of the PSP 2018-2020 on 1 March 2018 transferred 82,028 of the company's awared at grant date was 6.12. The fair value at grant treasury shares to persons belonging to the share- date was valued using a Monte Carlo simulation model, based remuneration scheme, Bridge Plan 2017 for the EUR in thousands 2018 2017 taking into account share price at grant date, Volume performance period 2017, as settlement in accordance Weighted Average Price (VWAP), expected dividends, with the plan rules. Withholding tax of EUR 1.1 million Liability recognised in the balance sheet: risk-free interest rates, expected volatility of share was deduced from the gross amount. Funded defi ned benefi t obligation 5,809 6,143 prices, as well as correlation coeffi cients. Fair value of plan assets −4,095 −4,115

Surplus/defi cit 1,714 2,028 Share-Based payments Liability recognised in the balance sheet 1,714 2,028 EUR in thousands

Expense recorded in the income statement Jan-Dec 2018 Jan-Dec 2017

Share-based payments 2,719 8,024 Present value of Fair value of obligation plan assets Total

1 January 2017 6 403 −4 306 2 097 Liability recorded in the statement of fi nancial position 31 December 2018 31 December 2017 Current service cost 103 103 Liability related to share-based reward plan - 1,199 Interest cost/income 88 −60 28

191 −60 131 Cash-settled share-based payment transactions have strategic objective, as well as to improve the long-term been revalued on 1 January 2018 according to the commitment of personnel and off er incentives in the Remeasurements recognised: amendments to IFRS 2 and the accounting treatment form of potential increase in share value. Participation has changed from cash-settled to equity-settled. in the matching share plan is voluntary. The fi rst saving - Return on plan assets, excluding interest period in 2019-2020 begins in April 2019 and will run cost/income 152 152 Matching share plan for DNA personnel until March 2020. The saved shares are purchased - Actuarial gain or loss arising from changes In December, the Board of Directors of DNA Plc decid- quarterly at market value after the publication of in demographic assumptions 0 0 ed on the establishement of a matching share plan for fi nancial results. The Board of Directors of DNA will all DNA employees. The purpose of the plan is to steer decide annually on possible new savings periods and - Gain or loss arising from changes in fi nancial the activities of personnel towards the attainment of their terms. assumptions −3 −3

- Experience adjustments −238 −238

−241 152 −89 24 EMPLOYMENT BENEFIT Contributions: OBLIGATIONS - Contribution paid by employer −111 −111 Benefi ts paid:

DNA Group’s employee pensions are managed by exter- ees. These plans are based on the fi nal salary, and the - Benefi ts −210 210 0 nal insurance companies. The TyEL pension insurance persons covered receive a supplementary pension at is classifi ed as a defi ned contribution plan and are man- the defi ned level. The size of the benefi t at retirement Settlements aged by the pension insurance companies. DNA also is determined by factors such as years of service and 31 December 2017 6,143 −4,115 2,028 has additional defi ned benefi t plans for some employ- compensation earned while in employment.

162 DNA ANNUAL REPORT 2018 163 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

Assumptions regarding future mortality are set based into a weighted average life expectancy in years for a Present value of Fair value of on actuarial advice in accordance with published pensioner at the retirement age of 65 as follows: obligation plan assets Total statistics and experience. These assumptions translate

1 January 2018 6,143 −4,115 2,028 2018 Men Women

Current service cost 91 91 Plan participants retiring at the end of the fi nancial year 21.4 25.4

Interest cost/income 91 −61 30 Plan participants retiring 20 years after the end of the fi nancial year 22.0 27.0 182 −61 121

Remeasurements recognised: 2017 Men Women

- Return on plan assets, excluding interest Plan participants retiring at the end of the fi nancial year 21.4 25.4 cost/income −8 −8 Plan participants retiring 20 years after the end of the fi nancial year 22.0 27.0 - Actuarial gain or loss arising from changes in demographic assumptions 0 0

- Gain or loss arising from changes in fi nancial assumptions −314 −314 The sensitivity of the defi ned benefi t obligation to changes in the weighted prinsipal assumptions:

- Experience adjustments 11 11 Impact on defi ned benefi t obligation

−303 −8 −311 2018 Change in assumption Increase Decrease Contributions: Discount rate 0.50% −7.1% 8.0% - Contribution paid by employer −124 −124 Salary growth rate 0.50% 1.2% −1.1% Benefi ts paid: Pension growth rate 0.50% 6.5% −5.9%

- Benefi ts −213 213 0 Addition of one year Settlements Life expectancy 5.1% 31 December 2018 5,809 −4,095 1,714 Impact on defi ned benefi t obligation

2016 Change in assumption Increase Decrease Signifi cant actuarial assumptions: Discount rate 0.50% −7.5% 8.5% 2018 2017 Salary growth rate 0.50% 1.4% −1.3% Discount rate 1.70% 1.50% Pension growth rate 0.50% 6.8% −6.2% Infl ation 1.60% 1.70% Addition of one year Salary growth rate 2.80% 3.20% Life expectancy 5.0% Benefi t growth rate 1.90% 2.00%

164 DNA ANNUAL REPORT 2018 165 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

The above sensitivity analysis is based on a method Infl ation risk where one actuarial assumption changes but the others 25 PROVISIONS The benefi ts paid in the plan are tied to the TyEL index, remain unchanged. In practice, this is unlikely and which depends on infl ation (80 per cent) and a general some changes in assumptions may be correlated. salary index (20 per cent). High infl ation increases the Other/ When calculating the sensitivity of the defi ned bene- TyEL index, which in turn increases liabilities (IFRS) and 1 January Provisions Discount 31 December fi t obligation to signifi cant actuarial assumptions the annual contributions to the insurance company. EUR in thousands 2018 Additions used eff ect 2018 same method (present value of the defi ned benefi t Salary risk obligation calculated with the projected unit credit Asset retirement obligation 6,096 - -1,308 - 4,788 method at the end of the reporting period) has been If the salary of an employee increases by more than the applied as when calculating the pension liability recog- general salary index, the size of benefi t will increase, Restructuring provisions 58 39 - - 97 nised within the statement of fi nancial position. which in turn will increase the benefi t obligation, which Onerous contracts 732 1,115 -52 -1,304 490 increases the risk of higher contributions payable by The Group is exposed to several risks in relation to the the employer. defi ned benefi t plans, the most signifi cant of which are Other provision 418 - -209 - 208 described below. Life expectancy risk Total 7,304 1,153 -1,569 -1,304 5,583 Changes in the bond yields As regards the life expectancy risk, the insurance company carries the risk related to actual life expectancy According to the employer's IFRS reporting practice, deviating from the expected life expectancy. Changes the employer's obligations and liabilities depend on the Other/ in life expectancy have an impact on the employer's bond yields on the reporting date. Decrease in yields 1 January Provisions Discount 31 December obligations. The employer's risk in terms of changes in increases liabilities and the payment obligation of pen- EUR in thousands 2017 Additions used eff ect 2017 life expectancy only applies to future costs, whereas sion benefi ts calculated according to IAS 19. However, the insurance company carries the risk for benefi ts since the employer is not subject to an investment Asset retirement obligation 7,627 6 -1,537 - 6,096 accrued by the change date. risk in relation to the assets covering the liabilities, an Restructuring provisions 671 - -479 -133 58 increase in the yield of bonds will also have an eff ect. Expected contributions to the post-employment benefi t plan in 2019 are expected to total EUR 126 thousand. Onerous contracts 3,207 461 -183 -2,754 732 The weighted average duration of the defi ned benefi t Other provision 586 - -168 - 418 obligation was 15 years (2017: 16 years, 2016 17 years). Total 12,090 467 -2,366 -2,887 7, 3 0 4

EUR in thousands 2018 2017 Undiscounted pension benefi ts are expected to mature as follows: Non-current provisions 5,307 6,813 Pension benefi ts Current provisions 277 490 EUR in thousands 2018 2017 2016 Total 5,583 7, 3 0 4 Less than 1 year 270 237 303

1-5 years 1,015 1,023 1,040

5-10 years 1,229 1,193 1,159 Asset retirement obligation Onerous contracts 10-15 years 1,107 1,113 1,181 The asset retirement obligation provision comprise This provision is mainly for a non-cancellable lease 15-20 years 1,014 1,034 1,049 the estimated dismantling and demolition costs of agreement and covers future leases of unused prem- data centres, masts and telephone poles. The asset ises. During the period, the Group has let part of the Over 20 years 3,019 3,304 3,427 retirement period for telephone poles is estimated at 15 under-utilised premises and the provision has been years, and 25 years for data centres and masts. Realis- reversed. The provision has been discounted. The Total 7,654 7,904 8,159 ing the dismantling and demolition costs do not involve non-cancellable lease agreement expires in 2025. any signifi cant uncertainties.

166 DNA ANNUAL REPORT 2018 167 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

26 BORROWINGS 27 NET DEBT

EUR in thousands 2018 2017 EUR in thousands 31.12.2018 31.12.2017

Non-current Non-current borrowings 348,090 173,362

Loans from fi nancial institutions 46,154 23,718 Current borrowings 53,837 154,518

Bonds 301,936 149,643 Total borrowings 401,927 327,880

Total 348,090 173,362 Less cash and cash equivalents 22,654 23,592

Net debt 379,273 304,288

Current

Loans from fi nancial institutions 3,846 34,973 Change in net debt Reported in cash fl ows from nancingfi activities

Bonds - 99,550 Current Non-current Commercial papers 49,991 19,995 EUR in thousands Cash borrowings borrowings Net debt

Total 53,837 154,518 1.1.2017 46,238 40,290 327,659 321,710

Change in cash −22,647 - - 22,647

Proceeds from borrowings - 99,893 - 99,893 On 27 March 2018, DNA Plc issued a senior unsecured March 2021. The share of the repurchase equals 60% of bond of EUR 250 million. The new bond matures on the nominal value of the notes, EUR 150 million in total. Repayment of borrowings - −84,881 −55,238 −140,119 27 March 2025 and carries a fi xed annual interest at After the repurchase, the notes were cancelled. Other non-cash transactions - 99,216 −99,059 157 the rate of 1.375%. Standard & Poor’s assigned a credit The issuance costs of the new senior unsecured bond rating of BBB to the new bond. of EUR 250 million and some of the costs of the repur- 31.12.2017 23,592 154,518 173,362 304,288 The proceeds from the bond issue have been partially chase, EUR 8.9 million in total, will be deferred over Change in cash −937 - used for the partial repurchase of the existing EUR 100 the bond’s seven-year term to maturity. - 937 million 2.625% fi xed-rate notes due 28 November 2018 Proceeds from borrowings - 563,726 296,154 859,880 and EUR 150 million 2.875% fi xed-rate notes due 12 Repayment of borrowings - −665,123 −113,810 −778,933

Other non-cash transactions - 715 −7,616 −6,901

31.12.2018 22,654 53,837 348,090 379,273

168 DNA ANNUAL REPORT 2018 169 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

28 TRADE AND OTHER PAYABLES 30 OPERATING LEASE AGREEMENTS

EUR in thousands 2018 2017 EUR in thousands 2018 2017

Current fi nancial liabilities carried at amortised cost Group as lessee

Trade payables 111,275 116,462 The future minimum lease payments under non-cancellable operating leases Accrued expenses 1) 71,188 67,673 Within one year 46,350 50,447 Advances received 25,918 28,227 Later than one year but no later than fi ve years 40,005 42,168 Contract liabilities 3,313 - Later than fi ve years 23,498 26,994 Other current liabilities 14,993 22,240 Total 109,853 119,609 Total current liabilities 226,687 234,603

1) Accrued expenses comprise: holiday pay and bonuses including social expenses totalling EUR 19.7 million (EUR 20.0 million), interest expenses The Group leases premises, telecommunication prem- penses of EUR 40.9 million (EUR 37.7 million). Relating EUR 4.0 million (EUR 3.8 million), deferred income EUR 1.3 million (EUR 3.5 million), spectrum license liability EUR 4.4 million (EUR 4.4 million), debt related to share-based reward plan EUR 0.0 million (EUR 1.2 million) as well as other accrued operative expenses EUR 41.8 million (EUR 34.8 million). ises, masts, vehicles etc. The lease periods are 1–6 to operating leases, the Group has made a provision of years and normally include the opportunity to continue EUR 0.5 million (EUR 0.7 million). For more information the agreement after the original end date. The 2018 see note 25 Provisions. income statement includes paid operating lease ex- 29 FAIR VALUE OF BORROWINGS 31 GUARANTEES AND CONTINGENT

Non-current borrowings 2018 2017 LIABILITIES Carrying Carrying EUR in thousands amount Fair value amount Fair value In addition, DNA’s agreements with some of its main Lease commitments relating to operating lease agree- Loans from fi nancial institutions 46,154 46,089 23,718 23,632 suppliers contain minimum order quantities (units) ments are presented in note 30. for the contract period. As DNA has discretion over Bonds 301,936 306,497 149,643 159,386 which units to purchase over the contract period and the price per unit varies, DNA is unable to estimate the Total 348,090 352,586 173,362 183,018 exact EUR amount for these commitments.

Current borrowings 2018 2017 Carrying Carrying EUR in thousands amount Fair value amount Fair value

Loans from fi nancial institutions 3,846 3,841 34,973 35,176

Bonds - - 99,550 101,626

Commercial papers 49,991 49,991 19,995 19,995

Total 53,837 53,832 154,518 156,797

Fair value of borrowings has been calculated by discounting the expected cash fl ow of borrowings using the market interest rate at balance sheet date plus the company's risk premium. The market value of the bond is the average value of the year-end quoted prices from two banks.

170 DNA ANNUAL REPORT 2018 171 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

32 RELATED PARTY TRANSACTIONS

Shares issued to management (excl. CEO) 27,004 228,143 DNA's related parties include the main shareholders team, including the CEO and the deputy CEO as well (Finda Oy, Finda Telecoms Oy, PHP Holding Oy) which as their close family members. In addition, related par- Terms are described in note 23 Share-based payments have signifi cant infl uence over the group, subsidiaries, ties include all entities controlled or jointly controlled associated companies, joint arrangements and mem- by a person idenfi tied as related party. EUR in thousands 2018 2017 bers of the Board of Directors and the management CEO Jukka Leinonen’s salary and commissions:

Parent company DNA Plc’s subsidiaries and ownerships: Salary and commissions 781 831

Share of Share of Share-Based Compensation Plan 2014 (gross) - 3,009 Company Country ownership votes Share-Based Bridge Plan 2017 (gross) 310 - DNA Kauppa Oy Finland 100% 100% Total 1,091 3,839 DNA Welho Oy Finland 100% 100%

Huuked Labs Oy Finland 100% 100% Members and deputy members of the Board of Directors Forte Netservices OOO Russia 100% 100% Korhonen Pertti 168 180

Listing of associated companies is presented in note 16. Jarmo Leino 0 8

The following related party transactions were carried out: Jukka Ottela 68 69

Kirsi Sormunen 68 72 EUR in thousands Sales Purchases Receivables Liabilities Anu Nissinen 65 70 2018 Tero Ojanperä 62 66 Organisations exercising signifi cant infl uence 21 2,759 2 354 Margus Schults 66 69 Associated companies 0 465 0 2 Heikki Mäkijärvi 17 48

Total 515 581 2017

Organisations exercising signifi cant infl uence 20 2,721 2 238

Associated companies 0 453 0 2

Management’s and CEOs’ pension KEY MANAGEMENT COMPENSATION commitments Members of the Group management are entitled to de- Company's key management comprises the Board of Directors and the Executive team. fi ned benefi t pension at the age of 62 and the CEO and deputy CEO of the parent company at the age of 60. EUR in thousands 2018 2017 They have supplementary defi ned contribution plans.

Salaries and other short-term employee benefi ts 3,563 3,940

Pension expenses - defi ned contribution plan and defi ned benefi t plan 894 941

Share-based payments 1,182 4,172

Total 5,639 9,053

172 DNA ANNUAL REPORT 2018 173 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

33 IMPACT OF NEW AND AMENDED Impact on group opening balance Changes in Changes in Changes in STANDARDS 31.12.2017 accounting accounting accounting po- Adjusted EUR in thousands Reported policy IFRS 2 policy IFRS 9 licy IFRS 15* 1.1.2018

This note describes the impact of the adoption of IFRS The IFRS 15 Revenue from Contracts with Customers ASSETS 2 Share-Based Payments, IFRS 9 Financial Instruments standard was published in May 2014. The new IFRS 15 and IFRS 15 Revenue from Contracts with Customers on standard includes a fi ve-step process which must be Non-current assets DNA’s fi nancial statements. applied for contracts with customers before revenue can be recognised. The new standard will replace IAS 18 and Goodwill 327,206 - - - 327,206 Amendments to IFRS 2 Share-Based Payments (eff ective IAS 11 standards and the related interpretations. DNA Plc 1 January 2018). The amendments provide clarifi cation Other intangible assets 178,070 - - −4,375 173,695 adopted the standard in the reporting period beginning on situations where the classifi cation of a share-based on 1 January 2018 retrospectively with the cumulative payment transaction changes from cash-settled to equi- Property, plant and eff ect of initially applying the standard recognised as an equipment 421,580 - - - 421,580 ty-settled. Additionally, amendments provide new guid- adjustment to the opening balance of retained earnings ance regarding plans in which the gross reward earned on 1 January 2018. Investments in associates 1,199 - - - 1,199 is settled partly in shares and partly in cash due to an obligation to withhold tax from the participants. As a The Group has identifi ed that changes will take place in Other result, as of 1 January 2018, DNA’s share-based payment reporting in the following areas: investments 117 - - - 117 rewards will be treated as equity-settled as the cash-set- Allocation of discounts to the performance obli- tled components relate directly to DNA’s obligation to Trade and other gations: Under IFRS 15, discounts shall be allocated to receivables 38,468 - - 34,107 72,575 withhold tax from the participants. The accumulated the separate performance obligations on the basis of liability related to cash-settled components has been their relative standalone selling prices. Therefore, the Deferred tax assets 8,475 - 190 722 9,387 reclassifi ed to equity on the date of transition. allocation of discounts to the performance obligations Total non-current assets - 190 30,453 DNA adopted the IFRS 9 Financial Instruments standard changes. A portion of the revenue is recognised earlier. 975,115 1,005,758 on 1 January 2018. It became eff ective for fi nancial peri- Under IFRS 15, the discounts are to be recognised evenly ods beginning on or after 1 January 2018. IFRS 9 replaces throughout the contract period. IAS 39 and changes the classifi cation and measurement Current assets Under the new guidance also the point of recogni- of fi nancial instruments and recognition of impairment tion for certain revenues and contract costs changes. loss. The standard also contains new requirements for Inventories 22,909 - - - 22,909 Under the new guidance, activation and connection fees hedge accounting. DNA does not apply hedge account- are recognised during the contract period. IFRS 15 also Trade and other ing. The Group experienced no material impact from the requires that incremental costs of obtaining a contract receivables 181,164 - −929 - 180,236 changes introduced by IFRS 9. are capitalised. Capitalised incremental costs of obtaining a contract are amortised over the expected contract Other current receivables 1,168 - - - 1,168 period. Income tax receivables 9,780 - - - 9,780 The analysis also indicates that the capitalisation of costs of obtaining a contract is expected to have a major Accruals 13,230 - −20 25,478 38,688 impact on the timing of cost recognition. This will mainly Cash and cash equivalents 23,592 - - - 23,592 aff ect Consumer Business. Total current assets 251,843 - −949 25,478 276,372

The table below illustrates the classifi cation of fi nancial instruments according to IFRS 9.

Valuation Total assets 1,226,958 - −759 55,932 1,282,130 Classifi cation Classifi cation Valuation according to according to according to according IFRS 9 at EUR in thousands IAS 39 IFRS 9 to IAS 39 January 1, 2018

Trade and other Loans and other Amortised cost 181,164 180,236 receivables receivables

Interest-bearing Loans and other Fair value through investments receivables profi t and loss

Other investments Available-for-sale Fair value through 117 117 fi nancial assets profi t and loss or other comprehensive income

174 DNA ANNUAL REPORT 2018 175 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

Changes in Changes in Changes in 31.12.2017 accounting accounting accounting Adjusted Impact of IFRS 15 on the consolidated income statement 2018 EUR in thousands Reported policy IFRS 2 policy IFRS 9 policy IFRS 15* 1.1.2018

Equity In the income statement, the impact on materials and adjustment of fi gures after the adoption of IFRS 15, net services as well as depreciation, amortisation and sales of fi xed packages decreased by EUR 7.3 million Equity attributable to owners of impairment is due to the deferral of sales and agent and sales of mobile packages increased by EUR 7.0 the parent commissions. In general, it can be stated that IFRS 15 million. did not have a material eff ect on net sales. The impact Share capital 72,702 - - - 72,702 Sales commissions and fees paid on obtaining a con- on total net sales for the fi nancial year 2018 was EUR tract are, according to IFRS 15, recognised as incre- -1.8 million, of which EUR -1.1 million was in relation to Reserve for invested unrestricted mental costs of obtaining a contract and amortised equity 653,056 653,056 sale of goods. - - - over the expected contract period, which increased Treasury The main changes took place between the net sales EBITDA by EUR 3.0 million. shares −4,055 - - - −4,055 groups of fi xed and mobile packages. As a result of

Retained earnings −210,425 1,199 −759 41,281 −168,704 1-12/2018 1-12/2018 EUR in thousands Reported IFRS 15 Adjusted* Net result for the period 93,086 - - - 93,086 Net sales 911,758 −1,755 913,513 Total equity 604,363 1,199 −759 41,281 646,085 Other operating income 3,804 - 3,804

Materials and services −398,661 3,112 −401,773 Liabilities Employee benefi t expenses −107,388 −112 −107,276 Non-current liabilities Depreciation, amortisation and Borrowings 173,362 - - - 173,362 impairments −146,023 3,872 −149,895

Employment benefi t obligations 2,028 - - - 2,028 Other operating expenses −124,592 30 −124,622

Provisions 6,813 - - - 6,813 Operating result, EBIT 138,898 5,148 133,751

Deferred tax liabilities 22,783 - - 11,042 33,825

Other non-current liabilities 23,605 - - 1,542 25,147 Finance income 523 - 523

Total non-current liabilities 228,591 - - 12,584 241,176 Finance expense −11,700 - −11,700

Share of associates' results 14 - 14

Current liabilities Net result before income tax 127,736 5,148 122,588

Borrowings 154,518 - - - 154,518

Provisions 490 - - - 490 Income tax expense −25,502 −1,030 −24,472

Trade and other payables 234,603 −1,199 - 2,066 235,470 Net result for the period 102,234 4,118 98,116

Income tax liabilities 4,391 - - - 4,391 Attributable to:

Total current liabilities 394,003 −1,199 - 2,066 394,869 Owners of the parent 102,234 4,118 98,116

Total equity and Earnings per share for net result liabilities 1,226,958 - −759 55,932 1,282,130 attributable to owners of the parent:

* In non-current and current assets, the main impacts of IFRS 15 are due to the deferral of sales and agent commissions. Previously, agent commis- Earnings per share, basic EUR 0.77 0.03 0.74 sions of certain fi xed-term contracts have been recognised as intangible assets. With the adoption of IFRS 15, intangible assets decrease, as the earlier accounting treatment has been cancelled and all commissions are deferred over the expected customer lifetime according to IFRS 15. The new deferral method of commission costs according to IFRS 15 increases receivables. In addition to the deferral of these costs, trade and other Earnings per share, diluted EUR 0.77 0.03 0.74 receivables include receivables according to IFRS 15 due to the new deferral method of revenue. The main impact of deferral on receivables is related to discounts.

The main impact on liabilities is due to the deferral of activation and one-time fees over the contract period, which increases liabilities. *Adjusted fi gures are disclosed as prepared under 2017 revenue guidance and do not currently incorporate the impact from the adoption of IFRS 15 as of 1 January 2018.

176 DNA ANNUAL REPORT 2018 177 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

IFRS 15 impact on group balance 2018 IFRS 15- 31.12.2018 EUR in thousands 31.12.2018 standard* Adjusted

Equity

IFRS 15- 31.12.2018 Equity attributable to owners of EUR in thousands 31.12.2018 standard* Adjusted the parent

Assets Share capital 72,702 - 72,702

Non-current assets Reserve for invested unrestricted equity 506,079 - 506,079 Goodwill 327,206 - 327,206 Treasury Other intangible assets 191,783 −1,305 193,087 shares −2,806 - −2,806

Property, plant and Retained earnings −73,439 41,281 −114,721 equipment 412,550 - 412,550 Net result for the period 102,234 4,118 98,116 Investments in associates 1,209 - 1,209 Total equity 604,770 45,399 559,371 Available-for-sale fi nancial assets 117 - 117

Trade and other LIABILITIES receivables 76,026 35,981 40,045 Non-current liabilities Deferred tax assets 7,691 841 6,850 Borrowings 348,090 - 348,090 Total non-current assets 1,016,582 35,517 981,064 Employment benefi t obligations 1,714 - 1,714

Provisions 5,307 - 5,307 Current assets Deferred tax liabilities 34,825 12,190 22,635 Inventories 31,681 - 31,681 Other non-current liabilities 34,978 1,587 33,390 Trade and other receivables 201,037 - 201,037 Total non-current liabilities 424,914 13,778 411,136

Other current receivables 1,439 - 1,439

Accruals 42,148 26,276 15,873 Current liabilities

Cash and cash equivalents 22,654 - 22,654 Borrowings 53,837 - 53,837

Total current assets 298,960 26,276 272,684 Provisions 277 - 277

Trade and other payables 226,687 2,616 224,071

Total assets 1,315,541 61,793 1,253,748 Income tax liabilities 5,056 - 5,056

Total current liabilities 285,857 2,616 283,241

Total equity and liabilities 1,315,541 61,793 1,253,748

In non-current and current assets, the main impacts of IFRS 15 are due to the deferral of sales and agent commissions. Previously, agent commissions of certain fi xed-term contracts have been recognised as intangible assets. The new deferral method of commission costs according to IFRS 15 increases receivables by EUR 61.2 million. In addition to the deferral of these costs, trade and other receivables include receivables according to IFRS 15 due to the new deferral method of revenue: EUR 1.1 million.

The main impact on liabilities is due to the deferral of activation and one-time fees over the contract period, which increases liabilities by EUR 4.2 million.

178 DNA ANNUAL REPORT 2018 179 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

34 EVENTS AFTER THE REVIEW DATE

DNA acquires Moi Mobiili DNA Shareholders' Nomination On 11 January 2019, DNA acquired European Mobile Committee's proposal to the Annual Operator Oy. The company’s wholly-owned subsidiary General Meeting 2019 Moi Mobiili Oy provides mobile services to private DNA Shareholders’ Nomination Committee submitted and corporate customers and has operated since 2016 a proposal to DNA Plc Annual General Meeting 2019 on as a service operator in DNA’s mobile network. The 21 January 2019. The Shareholders’ Nomination Com- acquired business operations will be consolidated into mittee proposed to the AGM that the number of Board DNA’s fi gures from the fi rst quarter of 2019 onwards. of Director members is seven and proposed re-election The transaction is not expected to have a signifi cant of current members Pertti Korhonen, Anu Nissinen, impact on DNA’s net sales or EBITDA for 2019. Tero Ojanperä, Jukka Ottela and Kirsi Sormunen. The committee proposed that Anni Ronkainen and Ted Roberts are elected as new members. The committee also proposed that Pertti Korhonen continues as the Chairman of the Board of Directors.

180 DNA ANNUAL REPORT 2018 181 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

PARENT COMPANY INCOME

STATEMENT, FAS 1 Jan - 1 Jan - EUR in thousands Note 31 Dec 2018 31 Dec 2017 1 Jan - 1 Jan - Finance income and expense EUR in thousands Note 31 Dec 2018 31 Dec 2017 4 Income from other investments NET SALES 1 783,508 749,744 20 17 Other interest and fi nancial income Other operating income 9,194 9,874 635 758

Materials and services Impairment - −149 Interest and other fi nancial expenses Purchases −148,608 −126,762 −11,482 −9,480 Total fi nance income and expense Change in inventory 8,735 1,254 −10,827 −8,855

External services −208,252 −210,980 RESULT BEFORE APPROPRIATIONS AND TAX Total materials and services −348,125 −336,488 86,877 68,069

Employee expenses Appropriations Salaries and commissions −77,417 −82,736 5

Social expenses Group contribution 26,236 28,474 Total appropriations Pensions −13,808 −13,056 26,236 28,474

Other social expenses −2,851 −2,898 Income tax Total employee expenses −94,075 −98,689 6 −23,888 −20,516 RESULT FOR THE FINANCIAL PERIOD Depreciation and impairments 2 89,225 76,027

Depreciation according to plan −127,955 −125,202

Impairment of intangible assets - −3,057

Total depreciation and impairments −127,955 −128,259

Other operating expenses 3 −124,842 −119,259

OPERATING RESULT 97,704 76,923

182 DNA ANNUAL REPORT 2018 183 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

PARENT COMPANY BALANCE SHEET, FAS

EUR in thousands Note 2018 2017 EUR in thousands Note 2018 2017

ASSETS CURRENT ASSETS

NON-CURRENT ASSETS Inventory

Intangible assets 7 Materials and supplies 31,500 22,766

Development costs - 12 Total inventory 31,500 22,766

Intangible rights 53,182 63,304

Goodwill 102,522 108,929 Non-current receivables

Other capitalised expenditure 40,184 32,944 Trade receivables 37,396 33,147

Prepayments and non-current assets under construction 27,918 8,105 Receivables from Group companies 9 21,395 21,395

Total intangible assets 223,806 213,294 Other receivables 9,271 3,974

Deferred tax asset 10 4,028 3,772

Property, plant and equipment 7 Total non-current receivables 72,090 62,287

Land and water 713 713

Buildings and constructions 18,879 15,663 Current receivables

Machinery and equipment 251,362 240,618 Trade receivables 167,723 155,367

Other tangible assets 873 873 Receivables from Group companies 9 62,311 73,612

Advances paid and construction in progress 40,070 55,971 Other receivables 822 835

Total tangible assets 311,897 313,838 Prepaid expenses 11 16,088 12,616

Total current receivables 246,944 242,430

Investments 8

Holdings in Group companies 82,653 82,653 Cash and cash equivalents 18,434 20,642

Shares in associated companies 3,982 3,982 TOTAL CURRENT ASSETS 368,967 348,125

Other shares and holdings 1,330 1,330 TOTAL ASSETS 992,635 963,222

Total investments 87,965 87,965

TOTAL NON-CURRENT ASSETS 623,668 615,097

184 DNA ANNUAL REPORT 2018 185 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

PARENT COMPANY CASH FLOW STATEMENT, FAS EUR in thousands Note 2018 2017

EQUITY AND LIABILITIES EUR in thousands 1.1.–31.12.2018 1.1.–31.12.2017

Cash fl ows from operations EQUITY 12 Result for the period 89,225 76,027 Share capital 72,702 72,702 Adjustments 1) 135,954 125,712 Reserve for invested unrestricted equity - 146,925 Change in working capital 2) −17,474 -18,277

Treasury shares −2,806 −4,055 Interest paid −6,436 −7,894 Retained earnings 67,338 −10,449 Interest received 636 758 Result for the period 89,225 76,027 Other fi nancial items −10,795 −881 TOTAL EQUITY 226,460 281,150 Income taxes paid −22,208 −23,343

Net cash generated from operating activities 168,902 152,102 PROVISIONS 13 5,436 5,893

Cash fl ows from investments LIABILITIES Investments in property, plant and equipment (PPE) and Non-current liabilities 14 intangible assets −126,807 -116,810 Borrowings 356,154 173,810 Proceeds from sale of PPE 23 8 Advances received 253 269 Other investments - −52 Other non-current liabilities 33,277 19,707 Short-term investments increase (-) / decrease (+) - 2,727 Deferred tax liability 10 1,304 - Loans granted −1,000 - Total non-current liabilities 390,988 193,786 Proceeds from loans receivables 1,000 4,000

Net cash used in investing activities Current liabilities −126,784 -110,127

Borrowings 53,837 155,234 Cash fl ows from fi nancing activities Advances received 4,764 6,548 Treasury share acquisition - −14,035 Trade payables 94,063 94,684 Distribution of dividend −145,333 −72,767 Liabilities to Group companies 15 140,511 150,255 Proceeds from borrowings 851,463 134,279 Other current liabilities 14,050 20,134 Repayment of borrowings −778,932 −140,119 Accrued expenses 16 62,525 55,540 Group contributions received 28,474 29,475 Total current liabilities 369,751 482,393 Net cash generated from (used in) fi nancing activities −44,327 −63,167 TOTAL LIABILITIES 760,739 676,179

TOTAL EQUITY AND LIABILITIES 992,635 963,222

186 DNA ANNUAL REPORT 2018 187 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

PARENT COMPANY ACCOUNTING PRINCIPLES, FAS EUR in thousands 1.1.–31.12.2018 1.1.–31.12.2017

Change in cash and cash equivalents −2,209 −21,192 Valuation principles Cash and cash equivalents at beginning of year 20,642 41,834 Fixed assets Cash and cash equivalents at end of year 18,434 20,642 Intangible assets and property, plant and equipment are shown on the balance sheet as acquisition costs, less planned depreciation. Planned depreciation is recorded on a straight-line basis over the useful life of an asset.

1) Adjustments:

Depreciation, amortisation and impairment 127,955 128,259 The depreciation/amortisation periods are:

Gains and losses on disposals of non-current assets −23 −8 Intangible rights 1 - 20 years

Other non-cash income and expense −26,236 −28,474 Goodwill 4 - 20 years

Finance income and expense 10,827 8,855 Other intangible assets 3 - 10 years

Income tax expense 23,888 20,516 Buildings 25 years

Change in provisions −457 −3,434 Constructions 10 - 25 years

Total adjustment 135,954 125,712 Machinery and equipment 3 - 15 years

2) Change in net working capital: The depreciation period of the merger loss capitalised Pensions Change in trade and other receivables −8,869 −32,401 to the balance sheet is 20 years, based on manage- The company’s employee pensions are managed by an ment’s view that the merger will generate economic external insurance company. Pension contributions and Change in inventories −8,735 −1,074 benefi ts for a minimum of 20 years. other costs for the fi nancial period are based on the Change in trade and other payables 130 15,198 Inventory valuation actuary calculations. Expenditure on pensions is recog- Inventories are stated at the lower of acquisition cost nised as an expense for the year in which it is incurred. Total change in net working capital −17,474 -18,277 or replacement cost or likely realisable value. Deferred tax Financial assets Deferred tax has been determined for temporary The company applies the valuation of fi nancial assets diff erences between tax bases of assets and their under KPL 5:2§ amounts in fi nancial reporting, using the tax rates eff ective for future years confi rmed on the balance Research and development sheet date. The deferred tax asset comprises Development expenditure is recognised as annual provisions, deferred depreciation and other temporary costs for the year in which it is incurred. Development diff erences. The deferred tax liability comprises share expenditure expected to generate future economic based payments. The balance sheet includes the benefi ts are capitalised under intangible assets and deferred tax asset and deferred tax liability at their amortised over three years. estimated realisable amount.

188 DNA ANNUAL REPORT 2018 189 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

PARENT COMPANY INCOME STATEMENT NOTES, FAS

Correction to prior periods DNA Plc's presentation has changed since 2017. 1 NET SALES

Reported EUR in thousands 2018 2017 EUR in thousands 2017 Re-classifi cations Restated Domestic 761,555 728,856 Income statement Foreign 21,953 20,887 Net sales Total 783,508 749,744 Domestic 736,086 −7,229 728,856

Foreign 13,658 7,229 20,887 During the fi nancial period, parent company employed personnel on average Total net sales 749,744 - 749,744 Total 1333 1,351

Comparability with prior period Foreign currency translations

The information for the prior period is comparable with Items denominated in foreign currencies are translated the information reported for 2018. using the Bank of Finland average rate. 2 DEPRECIATION AND AMORTISATION

EUR in thousands 2018 2017

Amortisation of intangible assets 44,256 44,808

Depreciation of tangible assets 83,699 80,394

Total 127,955 125,202

Impairment of intangible assets - 3,057

Total depreciation, amortisation and impairment 127,955 128,259

190 DNA ANNUAL REPORT 2018 191 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

3 OTHER OPERATING EXPENSES 4 FINANCE INCOME AND EXPENSE

EUR in thousands 2018 2017 EUR in thousands 2018 2017

Operating and maintenance costs 40,291 38,428 Dividends

Rental costs 53,678 50,446 from associated companies 4 4

External services 5,253 4,199 from others 6 4

Other cost items 25,620 26,186 Gains on disposals of non-current assets 10 8

Total 124,842 119,259 Total 20 17

In 2016, costs of external services were increased by costs related to the listing. Other interest and fi nancial expense

Interest income from group companies 393 471

Auditor fees Interest income from others 242 288

PricewaterhouseCoopers Oy Total other interest and fi nance income 635 758

Auditing fees 223 212

Actions referred to in Section 1.1.2 of the Finnish Auditing Act 7 7 Impairment of available-for-sale fi nancial assets 0 149

Tax consulting 24 66

Other fees 70 137 Other interest and fi nancial expense Total 323 422 Interest expense 6,680 7,791

Other fi nance expense 4,802 1,690

Total other interest and fi nancial expense 11,482 9,480

Total fi nancial income and expense −10,827 −8,855

192 DNA ANNUAL REPORT 2018 193 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

5 APPROPRIATIONS 7 INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT EUR in thousands 2018 2017

Group contribution 26,236 28,474 EUR in thousands 2018 2017

Total appropriations 26,236 28,474 Development costs

Acquisition cost 1 January 3,828 3,828

Acquisition cost 31 December 3,828 3,828

Accumulated amortisation 1 January 3,816 3,769 6 INCOME TAX Amortisation for the fi nancial period 12 48 Accumulated amortisation 31 December 3,828 3,816 EUR in thousands 2018 2017 Book value 31 December 0 12 Direct taxes 22,837 17,806

Income tax from previous periods 3 27 Intangible rights Change in deferred tax asset −256 2,682 Acquisition cost 1 January 259,972 230,575 Change in deferred tax liability 1,304 0 Transfers 5,365 29,398 Total income tax 23,888 20,516 Acquisition cost 31 December 265,338 259,972

Accumulated amortisation 1 January 196,668 174,758

Amortisation for the fi nancial period 15,487 21,911

Accumulated amortisation 31 December 212,156 196,668

Book value 31 December 53,182 63,304

Goodwill

Acquisition cost 1 January 150,768 150,768

Acquisition cost 31 December 150,768 150,768

Accumulated amortisation 1 January 41,839 35,431

Amortisation for the fi nancial period 6,408 6,408

Accumulated amortisation 31 December 48,246 41,839

Book value 31 December 102,522 108,929

194 DNA ANNUAL REPORT 2018 195 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

EUR in thousands 2018 2017 EUR in thousands 2018 2017

Other non-current intangible assets Land and water

Acquisition cost 1 January 201,157 177,510 Acquisition cost 1 January 713 713

Transfers 29,589 23,646 Book value 31 December 713 713

Acquisition cost 31 December 230,746 201,157

Accumulated amortisation 1 January 168,212 151,770 Buildings and constructions

Amortisation for the fi nancial period 22,350 16,442 Acquisition cost 1 January 28,421 24,230

Accumulated amortisation 31 December 190,562 168,212 Transfers 5,249 4,191

Book value 31 December 40,184 32,944 Acquisition cost 31 December 33,669 28,421

Accumulated depreciation 1 January 12,757 10,878

Prepayments and non-current assets under construction Depreciation for the fi nancial period 2,033 1,879

Acquisition cost 1 January 8,105 35,447 Accumulated depreciation 31 December 14,790 12,757

Additions 54,768 28,758 Book value 31 Decembe 18,879 15,663

Transfers −34,955 −53,044

Amortisations - −3,057 Machinery and equipment

Book value 31 December 27,918 8,105 Acquisition cost 1 January 1,128,909 1,051,474

Total intangible assets 223,806 213,294 Transfers 92,410 77,458

Disposals −64 −23

Acquisition cost 31 December 1,221,254 1,128,909

Accumulated depreciation 1 January 888,291 809,799

Depreciation for the fi nancial period 81,665 78,515

Depreciation relating to disposals −64 −23

Accumulated depreciation 31 December 969,892 888,291

Book value 31 December 251,362 240,618

196 DNA ANNUAL REPORT 2018 197 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

8 INVESTMENTS

EUR in thousands 2018 2017 EUR in thousands 2018 2017

Other tangible assets Holdings in Group companies

Acquisition cost 1 January 873 873

Acquisition cost 31 December 873 873 Book value 1 January 82,653 82,653

Book value 31 December 82,653 82,653

Prepayments and non-current assets under construction

Acquisition cost 1 January 55,971 56,800 Shares in associated companies

Additions 81,758 80,819

Transfers −97,658 −81,648 Book value 1 January 3,982 3,982

Acquisition cost 31 December 40,070 55,971 Book value 31 December 3,982 3,982

Total property, plant and equipment 311,897 313,838

Other shares and holdings

Book value 1 January 1,330 1,427

Increase - 52

Disposals - -1

Impairment - -149

Book value 31 December 1,330 1,330

Parent company ownerships:

Holdings in Group companies

DNA Kauppa Oy 100% 100%

Huuked Labs Oy 100% 100%

DNA Welho Oy 100% 100%

Forte Netservices OOO 100% 100%

All group companies are included in the parent company consolidated fi nancial statements.

198 DNA ANNUAL REPORT 2018 199 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

10 DEFERRED TAX LIABILITY/ASSET

2018 2017 EUR in thousands 2018 2017

Interests in joint arrangements Deferred tax asset

Suomen Yhteisverkko Oy 49% 49% Deferred tax asset from provisions 1,150 1,179

Shares in associated companies Deferred tax asset from deferred depreciation 1,219 1,637

Suomen Numerot Numpac Oy 33% 33% Deferred tax asset from temporary diff erences 1,659 956

Kiinteistö Oy Otavankatu 3 36% 36% Total deferred tax asset 4,028 3,772

Kiinteistö Oy Siilinjärven Toritie 38% 38%

Deferred tax liability

Suomen Numerot Numpac Oy is included in the parent company consolidated fi nancial statements Deferred tax liability from share-based payment 1,304 -

9 RECEIVABLES FROM GROUP COMPANIES

EUR in thousands 2018 2017

Long-term loan receivables 21,395 21,395 11 PREPAID EXPENSES

Trade receivables 32,769 42,628 EUR in thousands 2018 2017 Prepaid expenses 3,305 2,510 Trade payables 8,061 9,078 Group contribution receivables 26,236 28,474 Other receivables 8,027 3,538 Total 83,705 95,007 Total 16,088 12,616

Unrecognised costs

Of the bond issue costs:

Remainder of the capitalised long-term deferred receivables 1,497 546

Remainder of the capitalised short-term deferred receivables 325 850

200 DNA ANNUAL REPORT 2018 201 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

12 EQUITY 13 PROVISIONS

EUR in thousands 2018 2017 EUR in thousands 2018 2017

Share capital 1 January 72,702 72,702 Estimated decommissioning costs of data centres and masts 4,641 4,685

Share capital 31 December 72,702 72,702 Onerous contracts* 490 732

Pension provision 97 58

Reserve for invested unrestricted equity 1 January 146,925 136,561 Other provision 208 418

Share issue - 10,364 Total provisions 5,436 5,893

Capital payment −84,557 -

Reclassifi cation *) −62,368 - *The provision covers the under-utilised premises for the full agreement term until 2025.

Reserve for invested unrestricted equity 31 December - 146,925

Treasury shares 1 January −4,055 -

Increase - −14,035

Decrease 1,250 9,980 14 NON-CURRENT LIABILITIES

Treasury shares 31 December −2,806 −4,055 EUR in thousands 2018 2017

Bonds 310,000 150,000 Retained earnings 1 January 65,578 72,297 Loans from fi nancial institutions 46,154 23,810 Dividend distribution −60,776 −72,767 Other non-current liabilities 33,277 19,707 Share-based payments 168 −9,980 Accrued expenses 253 269 Reclassifi cation 62,368 - Deferred tax liability 1,304 - Retained earnings 31 December 67,338 −10,449 Total non-current liabilities 390,988 193,786

Result for the period 89,225 76,027 Non-current liabilities with a maturity of over fi ve years Total equity 226,460 281,150 Borrowings 265,385 -

Distributable funds

Retained earnings 67,338 −10,449

Net result for the period 89,225 76,027

Reserve for invested unrestricted equity - 146,925

Treasury shares −2,806 −4,055

Total distributable funds 153,758 208,448

*According to the decision of the AGM, EUR 62,420,161.66 was transferred from the reserve of invested unrestricted equity to retained earnings from previous fi nancial periods. This change has no eff ect on the total amount of unrestricted equity. 202 DNA ANNUAL REPORT 2018 203 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

15 LIABILITIES TO GROUP COMPANIES 16 ACCRUED EXPENSES

EUR in thousands 2018 2017 EUR in thousands 2018 2017

Trade payables 9,638 7,498 Holiday pay and bonuses 23,143 19,783

Accrued expenses 7,831 11,297 Interest expenses 4,029 3,785

Group account payables 123,042 131,459 Sales accruals 1,957 3,474

Total liabilities to Group companies 140,511 150,255 Income tax 4,790 4,391

Other accruals 28,372 24,106

Total accruals 62,525 55,540

204 DNA ANNUAL REPORT 2018 205 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

17 PLEDGED ASSETS AND CONTINGENT 18 RELATED PARTY TRANSACTIONS LIABILITIES DNA’s related parties include the main shareholders ties include all entities controlled or jointly controlled (Finda Oy, Finda Telecoms Oy, PHP Holding Oy) which by a person idenfi tied as related party. Related party EUR in thousands 2018 2017 have signifi cant infl uence over the group, subsidiaries, transactions are with same terms than transactions Pledged assets associated companies, joint arrangements and mem- carried out with independent parties. bers of the Board of Directors and the management Other obligations on behalf of Group companies team, including the CEO and the deputy CEO as well as their close family members. In addition, related par- Bank guarantee 1,272 1,308

Contingent liabilities and other liabilities Key management compensation

Finance lease payments EUR in thousands 2018 2017

Payments due during the next fi nancial period 653 751 CEO Jukka Leinonen

Payments due at a later date 463 668 Wages and salaries 781 831

Total fi nance lease payments 1,117 1,419 Share-based incentive scheme (gross) 310 3,009

Total 1,091 3,839

Leasing contracts are made for three-year periods.

Members and deputy members of the Board of Directors 515 581

Other contractual obligations Korhonen Pertti 168 180

Jarmo Leino 0 8

Loan collaterals involve the application of covenants. The agreed covenants are related to the good fi nancial Jukka Ottela 68 69 position and liquidity of the Group. Violation of any covenants may result in increased fi nancing costs or termination of the loan agreements. The Group monitors the covenants and they have been met during the Kirsi Sormunen 68 72 fi nancial period. Anu Nissinen 65 70

Leasehold commitments* 100,447 105,757 Tero Ojanperä 62 66

Margus Schults 66 69

*Includes EUR 490 thousand (EUR 732 thousand) for the non-voidable lease agreement reported under the Heikki Mäkijärvi 17 48 provision for onerous contracts.

In addition, DNA’s agreements with some of its main suppliers contain minimum order quantities (units) for the contract period. As DNA has discretion over which units to purchase over the contract period and the price per No loans have been granted to the Members of the Board of Directors or the CEO. unit varies, DNA is unable to estimate the exact EUR amount for these commitments. Members of the Executive team are entitled to defi ned benefi t pension at the age of 62 and the CEO and deputy CEO of the parent company at the age of 60. They have supplementary defi ned contribution plans.

206 DNA ANNUAL REPORT 2018 207 DNA ANNUAL REPORT 2018 FINANCIAL STATEMENTS

SIGNATURES OF THE ANNUAL REPORT AUDITORS’ NOTE AND FINANCIAL STATEMENTS

31 January 2019 An auditors’ report have been issued today on the performed audit.

8 February 2019

Pertti Korhonen Anu Nissinen Chairman of the Board of Directors Member of the Board of Directors PricewaterhouseCoopers Oy Authorised Public Accountants

Tero Ojanperä Jukka Ottela Member of the Board of Directors Member of the Board of Directors Mika Kaarisalo Authorised Public Accountant

Margus Schults Kirsi Sormunen Member of the Board of Directors Member of the Board of Directors

Jukka Leinonen President and CEO

208 DNA ANNUAL REPORT 2018 209 DNA ANNUAL REPORT 2018 AUDITOR’S REPORT

AUDITOR’S REPORT Overall group materiality EUR 6 million How we determined it We determined materiality using profi t before tax as the benchmark. To the Annual General Meeting of DNA Plc To the best of our knowledge and belief, the non-audit services that we have provided to the parent company Report on the Audit of the Financial and to the group companies are in accordance with the Rationale for the materiality We chose profi t before tax as the benchmark because, in our view, it is the bench- Statements applicable law and regulations in Finland and we have benchmark applied mark against which the performance of the group is most commonly measured by Opinion not provided non-audit services that are prohibited users, and is a generally accepted benchmark. Materiality of EUR 6 million is 4,7% under Article 5(1) of Regulation (EU) No 537/2014. The of profi t before tax which is within the range of acceptable quantitative materiality In our opinion non-audit services that we have provided are disclosed thresholds in auditing standards. the consolidated fi nancial statements give a true and in note 7 to the Financial Statements. fair view of the group’s fi nancial position and fi nan- Our Audit Approach cial performance and cash fl ows in accordance with How we tailored our group audit scope Group level, we have obtained suffi cient and appropri- International Financial Reporting Standards (IFRS) as Overview ate evidence regarding the fi nancial information of the We tailored the scope of our audit, taking into account adopted by the EU Group as a whole to provide a basis for our opinion on O verall group materiality: EUR 6 million, which is the structure of the group, the accounting processes the consolidated fi nancial statements. the fi nancial statements give a true and fair view determined materiality using net sales and profi t and controls, and the industry in which the group oper- of the parent company’s fi nancial performance and before tax as the benchmark. ates. DNA Plc mainly operates in Finland where it has Key Audit Matters fi nancial position in accordance with the laws and Audit scope: We have performed an audit of parent two subsidiaries signifi cant to the group. Key audit matters are those matters that, in our profes- regulations governing the preparation of the fi nan- company DNA Plc and its Finnish subsidiaries. sional judgment, were of most signifi cance in our audit cial statements in Finland and comply with statutory We determined the type of work that needed to be of the fi nancial statements of the current period. These requirements. Key audit matters: performed at group companies by the group engage- ment team. Audits were performed in Group compa- matters were addressed in the context of our audit of Our opinion is consistent with the additional report to Recognition of revenue in correct amount in the nies that are considered signifi cant either because of the fi nancial statements as a whole, and in forming the Audit Committee. correct period taking into consideration the complex- their individual fi nancial signifi cance or due to their our opinion thereon, and we do not provide a separate ity of information systems used in recording revenue opinion on these matters. What we have audited specifi c nature, covering the vast majority of reve- Impairment testing nue, assets and liabilities of the Group. We performed As in all of our audits, we also addressed the risk of We have audited the fi nancial statements of DNA Plc selected specifi ed procedures as well as analytical management override of internal controls, including (business identity code 0592509-6) for the year ended As part of designing our audit, we determined materi- procedures to cover the remaining companies. among other matters consideration of whether there 31 December 2018. The fi nancial statements comprise: ality and assessed the risks of material misstatement in the fi nancial statements. In particular, we considered By performing the procedures above at reporting com- was evidence of bias that represented a risk of material the consolidated balance sheet, income statement, where management made subjective judgements; for ponents, combined with additional procedures at the misstatement due to fraud. statement of comprehensive income, statement example, in respect of signifi cant accounting estimates of changes in equity, statement of cash fl ows and that involved making assumptions and considering notes, including a summary of signifi cant accounting future events that are inherently uncertain. Key audit matter in the audit of the group How our audit addressed the policies key audit matter Materiality the parent company’s balance sheet, income statement, statement of cash fl ows and notes. The scope of our audit was infl uenced by our appli- Recognition of revenue in correct amount in the correct period cation of materiality. An audit is designed to obtain rea- taking into consideration the complexity of information systems used in recording revenue Basis for Opinion sonable assurance whether the fi nancial statements are See note 5 Net Sales to the consolidated financial statements. The We have reviewed the various sales processes of the Group and We conducted our audit in accordance with good free from material misstatement. Misstatements may net sales of the group for the period 1 January to 31 December 2018 mapped the related controls, through which the Group management auditing practice in Finland. Our responsibilities under arise due to fraud or error. They are considered materi- was EUR 911.8 (886.1) million. aims to ensure that all transactions are recorded in correct amount in the correct period in the company accounts. As part of our audit: good auditing practice are further described in the al if individually or in aggregate, they could reasonably Our audit focused on revenue recognition since the various sales processes of the Group are system dependent and the Group uses We tested the functionality of the identifi ed controls and Auditor’s Responsibilities for the Audit of the Financial be expected to infl uence the economic decisions of several different invoicing systems. evaluated their suffi ciency in identifying and/or preventing material Statements section of our report. users taken on the basis of the fi nancial statements. We identified and evaluated the following risks that might lead to the misstatement. net sales not being presented correctly in the financial statements: Inspected through sampling the correctness of invoicing in various We believe that the audit evidence we have obtained Based on our professional judgement, we determined The system dependency and material quantity of sales transactions billing systems by comparing the invoiced amounts to contracts is suffi cient and appropriate to provide a basis for our certain quantitative thresholds for materiality, includ- require the company to have suffi cient and functional controls made by clients and/or price lists. opinion. ing the overall group materiality for the consolidated fi - to ensure correctness of net sales. Lack of controls might lead to In addition, we have audited the most material accruals of revenue nancial statements as set out in the table below. These, undetected systematic errors. made in the fi nancial statements through testing the functionality of the key periodisation reports and performing both analytic auditing Independence together with qualitative considerations, helped us to The sales processes’ system dependency and material quantity of sales transactions require the company to have suffi cient and procedures and manual audit procedures to ascertain correctness of We are independent of the parent company and of the determine the scope of our audit and the nature, timing functional controls to ensure that sales revenue is recognised and the accruals. group companies in accordance with the ethical re- and extent of our audit procedures and to evaluate the recorded as sales in the correct fi nancial period. In addition we have tested the IT-environment for information quirements that are applicable in Finland and are rele- eff ect of misstatements on the fi nancial statements as Revenue recognition is a key audit matter in the audit due to systems used in recording revenue including: vant to our audit, and we have fulfi lled our other ethical a whole. recorded revenue being dependent on information produced by Testing revenue related information systems’ controls for access to complex invoicing systems. program and data, user and change management and IT responsibilities in accordance with these requirements. operations.

210 DNA ANNUAL REPORT 2018 211 DNA ANNUAL REPORT 2018 AUDITOR’S REPORT

Evaluate the appropriateness of accounting policies Other Reporting Requirements Key audit matter in the audit of the group How our audit addressed the used and the reasonableness of accounting estimates key audit matter and related disclosures made by management. Appointment

Goodwill impairment testing Conclude on the appropriateness of the Board of We were appointed as auditors by the annual general Reference to the financial statements note 15 We obtained and reviewed the impairment testing calculations of the Directors’ and the Managing Director’s use of the meeting on 22 March 2017. Trading in the DNA share Goodwill recorded in the consolidated financial statements amounts management. As a part of the audit: going concern basis of accounting and based on the began on the pre-list of Nasdaq Helsinki (the Helsinki to EUR 327.2 (327.2) million. The management of the company We accessed calculations prepared by the management and audit evidence obtained, whether a material uncer- Stock Exchange) on 30 November 2016, and on the is responsible for the impairment testing. As described in the evaluated the accounting principles used in their preparation tainty exists related to events or conditions that may offi cial list of the Helsinki Stock Exchange on 2 Decem- accounting principles to the consolidated financial statements, the We discussed the most material assumptions used in the estimation identification of impairment indicators as well as the estimation of of cash flows and compared them to the internal and external cast signifi cant doubt on the parent company’s or ber 2016. future cash flows and the determination of fair values for assets (or information available as well as to the long-term strategic plans the group’s ability to continue as a going concern. If group of assets) require management to make significant judgements. and budget approved by the management. Other Information The most significant assumptions in impairment testing are growth we conclude that a material uncertainty exists, we in net sales, development of EBITDA, determination of discount We reviewed and evaluated the basis for and mathematical are required to draw attention in our auditor’s report The Board of Directors and the Managing Director are accuracy of the definition of the discount rate (WACC). rate (WACC) and the long term growth rate used after the five-year to the related disclosures in the fi nancial statements responsible for the other information. The other infor- forecast period. We tested the mathematical correctness of the impairment testing or, if such disclosures are inadequate, to modify our mation comprises the report of the Board of Directors We have identified and evaluated the risk that assumptions used in calculations. the impairment testing are not appropriate for the purpose and that opinion. Our conclusions are based on the audit evi- and the information included in the Annual Report, but the presented amount of goodwill is too high. dence obtained up to the date of our auditor’s report. does not include the fi nancial statements and our au- Valuation of goodwill is a key audit matter in the audit due to the size However, future events or conditions may cause the ditor’s report thereon. We have obtained the report of of the goodwill balance and the high level of management judgement parent company or the group to cease to continue as the Board of Directors prior to the date of this auditor’s involved. a going concern. report and the Annual Report is expected to be made We have no key audit matters to report with respect to our audit of the parent company financial statements. available to us after that date. Evaluate the overall presentation, structure and There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014 with respect to the content of the fi nancial statements, including the Our opinion on the fi nancial statements does not cover consolidated financial statements or the parent company financial statements. disclosures, and whether the fi nancial statements the other information. represent the underlying transactions and events so In connection with our audit of the fi nancial state- that the fi nancial statements give a true and fair view. ments, our responsibility is to read the other informa- free from material misstatement, whether due to fraud Responsibilities of the Board of Directors Obtain suffi cient appropriate audit evidence regard- tion identifi ed above and, in doing so, consider wheth- or error, and to issue an auditor’s report that includes and the Managing Director for the Financial ing the fi nancial information of the entities or busi- er the other information is materially inconsistent with our opinion. Reasonable assurance is a high level of Statements ness activities within the group to express an opinion the fi nancial statements or our knowledge obtained assurance, but is not a guarantee that an audit con- The Board of Directors and the Managing Director on the consolidated fi nancial statements. We are in the audit, or otherwise appears to be materially ducted in accordance with good auditing practice will are responsible for the preparation of consolidated responsible for the direction, supervision and perfor- misstated. With respect to the report of the Board of always detect a material misstatement when it exists. fi nancial statements that give a true and fair view in mance of the group audit. We remain solely responsi- Directors, our responsibility also includes considering Misstatements can arise from fraud or error and are accordance with International Financial Reporting ble for our audit opinion. whether the report of the Board of Directors has been considered material if, individually or in the aggregate, Standards (IFRS) as adopted by the EU, and of fi nancial prepared in accordance with the applicable laws and they could reasonably be expected to infl uence the We communicate with those charged with governance statements that give a true and fair view in accordance regulations. economic decisions of users taken on the basis of these regarding, among other matters, the planned scope with the laws and regulations governing the prepa- fi nancial statements. and timing of the audit and signifi cant audit fi ndings, In our opinion ration of fi nancial statements in Finland and comply including any signifi cant defi ciencies in internal control with statutory requirements. The Board of Directors As part of an audit in accordance with good auditing the information in the report of the Board of that we identify during our audit. and the Managing Director are also responsible for practice, we exercise professional judgment and main- Directors is consistent with the information in the such internal control as they determine is necessary to tain professional skepticism throughout the audit. We We also provide those charged with governance with a fi nancial statements enable the preparation of fi nancial statements that are also: statement that we have complied with relevant ethical the report of the Board of Directors has been requirements regarding independence, and to com- free from material misstatement, whether due to fraud Identify and assess the risks of material misstatement prepared in accordance with the applicable laws and municate with them all relationships and other matters or error. of the fi nancial statements, whether due to fraud or regulations. that may reasonably be thought to bear on our inde- In preparing the fi nancial statements, the Board of Di- error, design and perform audit procedures respon- pendence, and where applicable, related safeguards. If, based on the work we have performed on the other rectors and the Managing Director are responsible for sive to those risks, and obtain audit evidence that is information that we obtained prior to the date of this assessing the parent company’s and the group’s ability suffi cient and appropriate to provide a basis for our From the matters communicated with those charged auditor’s report, we conclude that there is a material to continue as a going concern, disclosing, as applica- opinion. The risk of not detecting a material mis- with governance, we determine those matters that misstatement of this other information, we are required ble, matters relating to going concern and using the statement resulting from fraud is higher than for one were of most signifi cance in the audit of the nancialfi to report that fact. We have nothing to report in this going concern basis of accounting. The fi nancial state- resulting from error, as fraud may involve collusion, statements of the current period and are therefore the regard. ments are prepared using the going concern basis of forgery, intentional omissions, misrepresentations, or key audit matters. We describe these matters in our au- accounting unless there is an intention to liquidate the the override of internal control. ditor’s report unless law or regulation precludes public Helsinki 8 February 2019 disclosure about the matter or when, in extremely rare parent company or the group or to cease operations, or Obtain an understanding of internal control relevant circumstances, we determine that a matter should not PricewaterhouseCoopers Oy there is no realistic alternative but to do so. to the audit in order to design audit procedures that be communicated in our report because the adverse Authorised Public Accountants are appropriate in the circumstances, but not for the Auditor’s Responsibilities for the Audit of consequences of doing so would reasonably be ex- purpose of expressing an opinion on the eff ective- Mika Kaarisalo the Financial Statements pected to outweigh the public interest benefi ts of such ness of the parent company’s or the group’s internal Authorised Public Accountant (KHT) Our objectives are to obtain reasonable assurance communication. control. about whether the fi nancial statements as a whole are

212 DNA ANNUAL REPORT 2018 213 DNA ANNUAL REPORT 2018 214 DNA ANNUAL REPORT 2018 215 DNA ANNUAL REPORT 2018 DNA Plc | Läkkisepäntie 21, 00620 Helsinki | dna.fi ANNEX B

INTERIM REPORT OF DNA PLC

HALF-YEAR FINANCIAL REPORT JANUARY–JUNE 2019 2

Index

Summary ...... 3 CEO’s review...... 5 DNA Plc Half-Year Financial Report 1–6/2019 ...... 6 Net sales and result ...... 7 Cash flow and financial position ...... 9 Development per business segment ...... 10 Capital expenditure...... 12 Network infrastructure and new technologies ...... 13 Personnel...... 14 Significant litigation matters ...... 14 Change in DNA’s Executive Team...... 14 Decisions of the Annual General Meeting ...... 15 Shares and shareholders...... 16 DNA’s financial objectives and dividend policy...... 17 Corporate responsibility ...... 17 Events after the reporting period ...... 18 Near-term risks and uncertainties ...... 19 Outlook for 2019...... 20 Group key figures ...... 21 Calculation of key figures...... 23 Quarterly information...... 25 Half-Year, Financial Report...... 27 Consolidated income statement...... 27 Consolidated statement of comprehensive income ...... 28 Consolidated statement of financial position...... 29 Consolidated statement of cash flows...... 30 Consolidated statement of changes in equity...... 31 Notes ...... 32

DNA Plc Half-Year Financial Report January–June 2019 Summary

DNA Plc’s half-year financial report, January–June 2019

DNA had an excellent first half of 2019, strong growth in mobile service

Summary Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year (reference period) . Figures are unaudited .

April–June 2019 ■■ IFRS 16 had a positive effect on EBITDA in the review ■■ Net sales increased 3 1. % and amounted to EUR 232 0. period and an insignificant impact on operating result million (225 0. million) . (Note 12) . ■■ Mobile service revenue grew 8 1. % and was EUR 120 6. ■■ Operating free cash flow increased 15 3%. and was million (111 5. million) . EUR 111 9. million (97 1. million) . ■■ EBITDA increased 7 .2% to EUR 77 8. million (72 6. million), ■■ Earnings per share was EUR 0 39. (0 39). . or 33 6%. (32 .3%) of net sales . ■■ The mobile communication subscription base decreased ■■ Operating result decreased 0 8. % and was EUR 35 7. by 0 7%,. totalling 2,807,000 (2,827,000) . million (36 0. million) . Operating result as a percentage ■■ Revenue per user (ARPU) for mobile communications of net sales was 15 4. % (16 0. %) . decline somewhat and was EUR 18 5. (18 7). . ■■ IFRS 16 had a positive effect on EBITDA in the review ■■ The mobile communication subscription turnover rate period and an insignificant impact on operating result (CHURN) decline and was 15 .5% (17 1. %) . (Note 12) . ■■ The fixed-network subscription base (voice, broadband ■■ Earnings per share was EUR 0 19. (0 .20) . and cable television) grew to 1,227,000 subscriptions ■■ Revenue per user (ARPU) for mobile communications (1,137,000) . increased 1 1. % and was EUR 18 6. (18 4). . ■■ The mobile communication subscription turnover rate DNA’s guidance for 2019 remains unchanged (CHURN) decreased and was 13 7%. (15 4. %) . DNA’s net sales in 2019 is expected to remain at the same level as in 2018, and EBITDA in 2019 is expected to increase January–June 2019 substantially from 2018 . DNA’s financial position and ■■ Net sales increased 3 0. % and amounted to EUR 460 9. liquidity are expected to remain at a healthy level . million (447 3. million) . ■■ Mobile service revenue grew 6 7%. and was EUR 238 8. DNA’s guidance for 2019 is disclosed with consideration million (223 7. million) . to the impact of the adoption of IFRS 16 . The adoption of ■■ EBITDA increased 7 4. % and was EUR 153 .9 million (143 3. IFRS 16 from the beginning of 2019 is estimated to have a million), or 33 4. % (32 0. %) of net sales . positive impact of approximately EUR 17 million in EBITDA ■■ There were no items affecting the comparability of in 2019 . The impact of IFRS 16 on operating result (EBIT) is EBITDA or operating result in the review or reference insignificant . periods . ■■ Operating result decreased 1 0. % and was EUR 70 .5 million (71 .2 million) . Operating result as a percentage of net sales was 15 .3% (15 .9%) .

DNA Plc Half-Year Financial Report January–June 2019 4

Key figures Figures are unaudited . The impact of IFRS 16 on the statement of financial position and income statement is presented in Note 12 .

EUR million 4–6/2019 4–6/2018 Change-% 1–6/2019 1–6/2018 Change-% 1–12/2018

Net sales 232.0 225 0. 3 1. 460.9 447 .3 3 0. 911 8. EBITDA 7 7.8 72 6. 7 .2 153.9 143 .3 7 4. 284 .9 % of net sales 33.6 32 .3 33.4 32 0. 31 .2 Depreciation, amortisation and impairment 42.2 36 6. 83.4 72 0. 146 0. Operating result, EBIT 35.7 36 0. –0 8. 70.5 71 .2 –1 0. 138 9. % of net sales 15.4 16 0. 15.3 15 .9 15 .2 Net result before tax 33.4 33 8. –0 9. 65.6 64 4. 1 .9 127 7. Net result for the period 26.2 27 0. –3 1. 51.4 51 4. 0 0. 102 .2 Return on investment (ROI), % 12.6 14 6. 12.6 14 .5 14 1. Return on equity (ROE), % 20.8 20 0. 18.4 17 .2 16 4. Capital expenditure 25.2 30 6. –17 7. 5 7.3 50 5. 13 .5 138 .3 Cash flow after investing activities 9.3 30 8. –69 8. 8.5 22 .9 –63 .2 63 4. Free cash flow to equity - - 46.6 27 3. 72 0. Net debt - - 607.5 418 .9 379 .3 Net debt/EBITDA 1.95 1 44. 1.97 1 46. 1 33. Net gearing, % - - 118.5 75 8. 62 7. Equity ratio, % - - 36.7 45 .2 46 .9 Basic earnings per share, EUR 0.19 0 .20 0.39 0 .39 0 7. 7 Diluted earnings per share, EUR 0.19 0 .20 0.39 0 39. 0 7. 7 Personnel at the end of period - - 1,648 1,611 1,590

Additional information: Jukka Leinonen, CEO, DNA Plc, +358 44 044 1000, jukka .leinonen@dna fi. Timo Karppinen, CFO, DNA Plc, +358 44 044 5007, timo karppinen@dna. fi. Marja Mäkinen, Head of IR, DNA Plc, +358 44 044 1262, marja .makinen@dna .fi DNA Corporate Communications, +358 44 044 8000, communications@dna fi.

DNA’s financial publications in 2019: ■■ Interim Report January–September 2019, 22 October 2019 ■■ Capital Markets Day in Helsinki, 26 November 2019

DNA Plc Half-Year Financial Report January–June 2019 5

CEO’s review

DNA had a very good first half of the year . Our net sales increased 3 0. % year-on-year to EUR 460 .9 million . The increase was fuelled by the growth of mobile device sales and mobile service revenue, which was boosted by the positive development of our subscription base, mobile broadband services and average billing per customer . In the January-June period, our mobile service revenue grew 6 7%. and mobile device sales 15 1. % . Our EBITDA grew 7 4. % to EUR 153 .9 million, or 33 4. % of net sales .

Our mobile communication subscription base decreased by 20,000 year-on-year in the second quarter, due to a decrease in prepaid subscriptions . However, our postpaid subscription base increased by 65,000 from the reference period . Revenue per user (ARPU) for mobile communications in April–June increased and was EUR 18 6. (18 4). . Our customer CHURN rate, which remained at a very low level of 13 7%. (15 4. %) in the second quarter, is an indication of high customer satisfaction . Our fixed-network subscription base grew by 90,000 subscriptions .

In May, we strengthened our market position in the Tampere region by acquiring the fibre optic network infrastructure and consumer business of ICT Elmo Oy In April, DNA was awarded as the most responsible (formerly Tampereen Puhelin) . DNA gained more than company in its industry in Finland according to the 30,000 new fixed-line broadband customers and almost Sustainable Brand Index study . In total, 10,300 consumers 25,000 new cable TV customers . The extensive fibre-optic responded to the study in Finland . The annual study is network infrastructure will facilitate the introduction of 5G based on the principles of responsibility and the objectives and boosts our competitiveness in the Pirkanmaa region . of sustainable development of the UN Global Compact, and it is the largest independent study in its field in the We continued to prepare our network for 5G deployment Nordic countries . with the introduction of 5G-capable technology and increased network capacity . We also built a 5G network We will continue the long-term development of our for the SuomiAreena event in Pori where we are business, focusing on customer experience, personnel showcasing the DNA Smart Home . Outside Pori, DNA’s satisfaction and the resulting profitable growth . DNA’s 5G network is already available in Helsinki city centre, guidance for 2019 remains unchanged . DNA’s net sales in and we are expanding the network to other major cities 2019 is expected to remain at the same level as in 2018 . in Finland . Since last autumn, we have also tested a fixed With consideration to the impact of IFRS 16, EBITDA in 5G broadband service and started using the actual 5G 2019 is expected to increase substantially from 2018 . DNA’s frequency in the second quarter of 2019 . Fixed 5G, or financial position and liquidity are expected to remain at a high-speed broadband for detached homes, will be one healthy level . of DNA’s first commercial services provided with the 5G technology . It allows us to bring high-speed broadband connections to detached homes in areas without access to optical fibre connections . Consumers will be able to use 5G services as soon as more technologically mature 5G-capable mobile devices become available at reasonable Jukka Leinonen price points, which is expected to happen in early 2020 . CEO

DNA Plc Half-Year Financial Report January–June 2019 6

DNA Plc Half-Year Financial Report 1–6/2019

Operating environment Regulation January–June 2019 DNA’s 5G licence entered into force in early 2019 . The Finnish economy has been on the growth path and both consumer and business confidence are strong . The Ministry of Transport and Communications has started Competition remained intense in the first half, in mobile the reform of the Act on Electronic Communication communication services in particular . Services to implement the requirements of the EU Directive . The new package of directives will mostly be The use of mobile data continued to grow, boosted by applied to national legislation by the end of 2020 . The cap increased adoption of smart phones, tablets and other on the cost of intra-EU mobile calls and texts has applied as Internet-connected devices as well as the growing demand of 15 May 2019 . for high-speed 4G subscriptions . The Ministry of Transport and Communications is preparing A clear trend in Finland right now is the migration of xDSL a market analysis on the wholesale markets for television subscribers to considerably faster fixed cable or fibre and radio services (M18) . optic broadband subscriptions or replacement of xDSL connections with 4G mobile data connections . In addition, The national data protection law related to personal data a growing number of households uses both fixed-network entered into force in the beginning of 2019 . EU institutions and mobile broadband . continued to process the draft ePrivacy regulation in the review period . Use of TV and video services became more versatile . While traditional TV viewing minutes decreased, the use Changes related to regulation and decisions of authorities of streaming and on-demand video services continued may have significant impacts on DNA’s business . to grow . Growth of cable television subscriptions also continued . More customers are watching HDTV broadcasts, and they also increasingly want to watch content conveniently at a time that works best for them .

Both private and public organisations revamped their operations by switching their voice communications and customer service to mobile solutions . The rising business use of cloud services increases the demand for network capacity and fast fibre optic connections .

DNA Plc Half-Year Financial Report January–June 2019 7

Net sales and result

Consolidated key figures

EUR million 4–6/2019 4–6/2018 Change-% 1–6/2019 1–6/2018 Change-% 1–12/2018

Net sales 232.0 225 0. 3 1. 460.9 447 .3 3 0. 911 8. EBITDA 7 7.8 72 6. 7 .2 153.9 143 .3 7 4. 284 .9 % of net sales 33.6 32 .3 33.4 32 0. 31 .2 Operating result, EBIT 35.7 36 0. –0 8. 70.5 71 .2 –1 0. 138 .9 % of net sales 15.4 16 0. 15.3 15 .9 15 .2 Net result for the period 26.2 27 0. –3 1. 51.4 51 4. 0 0. 102 .2

April–June 2019 January–June 2019 DNA’s net sales increased and totalled EUR 232 0. million DNA’s net sales increased and totalled EUR 460 .9 million (225 0. million) . The growth was fuelled by strong mobile (447 .3 million) . The growth was fuelled by strong mobile device sales and mobile service revenue1), which was device sales and mobile service revenue1), which was boosted by the positive development of the subscription boosted by the positive development of the subscription base, mobile broadband services and average billing base, mobile broadband services as well as average billing per customer . Mobile service revenue grew 8 1. % and per customer . Mobile service revenue grew 6 7%. and was EUR 120 6. million (111 .5 million) . Mobile device sales was EUR 238 8. million (223 7. million) . Mobile device sales were up 13 .3% from the reference period . During the were up 15 1. % from the reference period . During the first second quarter, 76 .2% (74,9%) of net sales was generated half of the year, 76 0. % (74 6%). of net sales was generated by consumer business and 23 8. % (25 1. %) by corporate by consumer business and 24 0. % (25 4. %) by corporate business . business .

EBITDA increased from the reference period and was EUR EBITDA increased from the reference period and was EUR 77 8. million (72 6. million) . The EBITDA percentage of net 153 .9 million (143 .3 million) . The EBITDA percentage of net sales was 33 6%. (32 .3%) . While the positive development sales was 33 4. % (32 0. %) . While the positive development is mostly due to the impact of IFRS 16, growth of service is mostly due to the impact of IFRS 16, growth of service revenue also contributed to it . revenue also contributed to it .

Operating result remained at the same level and totalled Operating result decreased and was EUR 70 .5 million (71 .2 EUR 35 7. million (36 0. million) . Operating result as a million) . Operating result as a percentage of net sales percentage of net sales was 15 4. % (16 0. %) . Operating result was 15 .3% (15 9%). . Operating result was weakened by an was weakened by an increase in depreciation . increase in depreciation .

Financial income and expenses amounted to EUR 2 3. Financial income and expenses amounted to EUR 4 .9 million (2 .2 million) . Financial expenses for the reference million (6 9. million) . Financial expenses for the reference period were increased by the senior unsecured bond issued period were increased by the senior unsecured bond issued by DNA . Income tax for the period was EUR 7 .3 million (6 8. by DNA . Income tax for the period was EUR 14 2. million million) . The effective tax rate for the period was 21 8. % (12 9. million) . The effective tax rate for the period was (20 1. %) . The net result for the first quarter declined and was 21 6%. (20 1. %) . The net result was at the level of comparison EUR 26 2. million (27 0. million) . Earnings per share was EUR period and was EUR 51 4. million (51 4. million) . Earnings per 0 19. (0 .20) . share was EUR 0 .39 (0 .39) .

1) Mobile service revenue = revenue generated by mobile subscriptions . Consumer and corporate mobile communication and mobile broadband services, corporate M2M services and corporate mobile virtual network operator (MVNO) services .

DNA Plc Half-Year Financial Report January–June 2019 8

Key operative indicators

4–6/2019 4–6/2018 Change-% 1–6/2019 1–6/2018 Change-% 1–12/2018 Number of mobile communication network subscriptions at end of period 2,807,000 2,827,000 –0 7. 2,877,000 Revenue per user (ARPU), EUR 18 6. 18 4. 1 1. 18 .5 18 7. –1 0. 18 7. Customer CHURN rate, % 13 7. 15 4. 15 .5 17 1. 16 .2 Number of fixed line subscriptions at end of period 1,227,000 1,137,000 7 .9 1,152,000

DNA’s mobile subscription base decreased by 20,000 more than 30,000 fixed-line broadband customers and subscriptions year-on-year . The number of postpaid almost 25,000 new cable TV customers as a result of the subscriptions was up by 65,000, and their revenue per user ICT Elmo business acquisition . (ARPU) increased from the reference period to EUR 18 6. (18 4). in the second quarter . The number of prepaid DNA’s customer CHURN rate was 13 7%. in the second subscriptions fell by 86,000, but their ARPU increased quarter (15 4. %) . This was due to high customer satisfaction to EUR 4 5. (3 .5) . Fixed-network subscription base grew and DNA’s ability to react quickly to competitors’ strongly, by 90,000 subscriptions . In June, in addition to campaigns . good organic growth in subscription base, DNA gained

DNA Plc Half-Year Financial Report January–June 2019 9

Cash flow and financial position

Cash flow and financial key figures

EUR million 4–6/2019 4–6/2018 Change-% 1–6/2019 1–6/2018 Change-% 1–12/2018

Cash flow after investing activities 9.3 30 8. –69 8. 8.5 22 .9 –63 .2 63 4.

EUR million 4–6/2019 4–6/2018 Change-% 1–6/2019 1–6/2018 Change-% 1–12/2018

Net debt, EUR million 607.5 418 .9 45 0. 379 .3 Net debt/EBITDA 1.95 1 44. 1.97 1 46. 1 .33 Net gearing, % 118.5 75 8. 62 7. Equity ratio, % 36.7 45 .2 46 .9

April–June 2019 DNA’s liquidity is at a healthy level . The Group’s liquid Cash flow after investing activities was EUR 9 .3 million assets amounted to EUR 36 6. million (at the end of 2018: (30 8. million) . Cash flow was impacted mostly by the ICT 22 7. million) . Net debt increased and was EUR 607 .5 million Elmo’s business acquisition in May . (at the end of 2018: 379 .3 million) . The Group’s liquid assets and undrawn committed credit limits amounted in total to January–June 2019 EUR 201 6. million (at the end of 2018: 187 7. million) . In April, DNA paid a dividend of EUR 145 4. million . Cash flow after investing activities was EUR 8 .5 million (at the end of 2018: 63 4. million) . Cash flow was impacted by Changes in working capital had an EUR 23 .2 million (–36 8. Moi Mobiili acquisition in January and ICT Elmo’s business million) negative impact on cash flow . The increase in acquisition in May . working capital was mostly due to a decline in trade payables in comparison to the end of 2018 . At the end of June, DNA had an undrawn EUR 150 million revolving credit facility (at the end of 2018: 150 million), DNA has a strong balance sheet . Net debt/EBITDA ratio and undrawn EUR 15 million overdraft facility (at the end of was 1 .97 at the end of the review period (at the end of 2018: 2018: 15 million) . In addition, DNA has a commercial paper 1 .33) . DNA’s equity ratio was 36 7%. at the end of June (at programme worth EUR 200 million (at the end of 2018: 150 the end of 2018: 46 9%). . Both key figures were impacted by million), under which EUR 120 million was drawn by the end the adoption of the IFRS 16 standard, and equity ratio also of the review period (at the end of 2018: 50 million) . declined due to the dividend payment . Net gearing increased and was 118 .5% at the end of Standard & Poor’s Global Ratings has assigned a long-term June (at the end of 2018: 62 7%). . Net gearing was mainly credit rating of BBB with a positive CreditWatch to DNA . impacted by the dividend payment, business restructuring and the adoption of IFRS 16, which increased liabilities as lease agreements are now disclosed as liabilities in the balance sheet .

DNA Plc Half-Year Financial Report January–June 2019 10

Development per business segment

Consumer business

EUR million 4–6/2019 4–6/2018 Change-% 1–6/2019 1–6/2018 Change-% 1–12/2018

Net sales 176.7 168 4. 4 .9 350.3 333 6. 5 0. 684 .9 EBITDA 59.6 56 1. 6 .2 117.2 109 5. 7 0. 218 8. % of net sales 33.7 33 .3 33.4 32 8. 31 .9 Operating result, EBIT 32.8 32 .2 1 6. 63.9 62 6. 2 0. 123 7. % of net sales 18.5 19 1. 18.2 18 8. 18 1.

April–June 2019 January–June 2019 Consumer business net sales increased and were EUR Consumer business net sales increased and were EUR 176 7. million (168 4. million) . Net sales were driven by the 350 3. million (333 6. million) . Net sales were driven by the increased demand for mobile services as well as good increased demand for mobile services as well as good mobile device sales . mobile device sales .

EBITDA increased and was EUR 59 6. million (56 1. million) . EBITDA increased and was EUR 117 2. million (109 5. million) . EBITDA was improved by a change in calculation method EBITDA was improved by a change in calculation method according to IFRS 16, as well as an increase in mobile according to IFRS 16, as well as an increase in mobile service revenue . The EBITDA percentage of net sales service revenue . The EBITDA percentage of net sales was 33 7%. (33 .3%) . Consumer business operating result was 33 4. % (32 8. %) . Consumer business operating result increased and was EUR 32 8. million (32 .2 million), or 18 .5% increased and was EUR 63 .9 million (62 6. million), or 18 .2% of consumer business net sales (19 1. %) . Depreciation of of consumer business net sales (18 8. %) . Depreciation of EUR 26 8. million (23 9. million) was allocated to consumer EUR 53 3. million (46 9. million) was allocated to consumer business . The increase was mostly due to IFRS 16 . business . The increase was mostly due to IFRS 16 .

On 11 January 2019, DNA acquired European Mobile Operator Oy . The company’s wholly-owned subsidiary Moi Mobiili Oy provides mobile services to private and corporate customers . The acquired business operations have been consolidated into DNA’s consumer business figures from the first quarter of 2019 onwards . The transaction is not expected to have a significant impact on DNA’s net sales or EBITDA for 2019 . Before the acquisition, Moi Mobiili operated a service operator in the DNA mobile network and the revenue was reported in DNA’s corporate business figures .

DNA Plc Half-Year Financial Report January–June 2019 11

Corporate business

EUR million 4–6/2019 4–6/2018 Change-% 1–6/2019 1–6/2018 Change-% 1–12/2018

Net sales 55.3 56 6. –2 .2 110.6 113 7. –2 7. 226 8. EBITDA 18.2 16 .5 10 6. 36.7 33 7. 8 .9 66 .2 % of net sales 33.0 29 2. 33.2 29 7. 29 2. Operating result, EBIT 2.9 3 7. –21 .5 6.7 8 6. –23 0. 15 .2 % of net sales 5.3 6 6. 6.0 7 6. 6 7.

April–June 2019 January–June 2019 DNA’s corporate business net sales decreased slightly DNA’s corporate business net sales decreased in the in the second quarter and were EUR 55 3. million (56 6. first half of the year and were EUR 110 6. million (113 7. million) . The decrease was mainly due to the change in the million) . The decrease was mainly due to the change in the reporting of Moi Mobiili, which is now part of consumer reporting of Moi Mobiili, which is now part of consumer business, as well as the decrease in interconnection business, as well as the decrease in interconnection charges . charges . The demand for mobile services had a positive impact on corporate business net sales . EBITDA decreased from the reference period and was EUR 18 2. million (16 .5 million), or 33 0. % (29 .2%) of net sales . EBITDA increased from the reference period and was EBITDA was improved by a change in calculation method EUR 36 7. million (33 7. million), or 33 .2% (29 7%). of net sales . according to IFRS 16 . Operating result decreased and was EBITDA was improved by a change in calculation method EUR 2 .9 million (3 7. million), or 5 .3% (6 6%). of net sales . according to IFRS 16 . Operating result decreased and was Depreciation of EUR 15 .3 million (12 8. million) was allocated EUR 6 7. million (8 6. million), or 6 0. % (7 6%). of net sales . to corporate business . The increase was mostly due to Depreciation of EUR 30 1. million (25 2. million) was allocated IFRS 16 . to corporate business . The increase was mostly due to IFRS 16 .

In January, DNA signed a four-year agreement with Veikkaus to supply the gaming company with the largest company-specific network in Finland . Service delivery got under way in early 2019 . First sales offices was connected to the network during April 2019 .

DNA Plc Half-Year Financial Report January–June 2019 12

Capital expenditure

EUR million 4–6/2019 4–6/2018 Change-% 1–6/2019 1–6/2018 Change-% 1–12/2018

Consumer business 13.6 20 .3 –32 .9 32.0 33 7. –5 1. 92 .9 Corporate business 11.6 10 .3 12 .2 25.4 16 8. 50 7. 45 4. Total capital expenditure 25.2 30 6. –17 7. 5 7.3 50.5 13.5 138 3.

Capital expenditure is defined as additions to property, plant and equipment and intangible assets excluding business acquisitions, gross acquisition cost of spectrum licenses and additions through asset retirement obligations . Capital expenditure includes annual cash instalments for the spectrum licenses .

EUR million 4–6/2019 4–6/2018 Change-% 1–6/2019 1–6/2018 Change-% 1–12/2018

Operative capital expenditure 23.7 30 6. –22 8. 42.0 46 1. –9 0. 133 .9 % of net sales 10.2 13 6. 9.1 10 .3 14 7. Lease investments (IFRS 16) 1.6 - 6.8 - Spectrum licence - - 8.6 4 4. 95 .5 4 4. Total capital expenditure 25.2 30 6. –17 7. 5 7.3 50 .5 13 .5 138 .3

Operative capital expenditure is reported capital expenditure excluding annual cash instalments for capitalised spectrum licences and lease investments (IFRS16) .

April–June 2019 January–June 2019 In the second quarter, capital expenditure was EUR 25 2. In the first half of 2019, capital expenditure was EUR 57 .3 million (30 6. million) . No spectrum license payments were million (50 .5 million) . Operative capital expenditure made during the reporting or reference periods . Operative decreased to EUR 42 0. million (46 1. million), or 9 1. % (10 .3%) capital expenditure was EUR 23 7. million (30 6. million), or of net sales . In the first quarter, the spectrum licence fees 10 .2% (13 6%). of net sales . for the 700 MHz and 3 .5 GHz bands contributed EUR 8 6. million (4 4. million) to capital expenditure .

Major individual items included in capital expenditure in the review period were 4G network capacity expansion and development, 5G readiness as well as fibre optic networks and transmission systems .

DNA Plc Half-Year Financial Report January–June 2019 13

Network infrastructure and new technologies

DNA makes continuous investments in mobile and fixed According to the report* published by Tefficient in networks to keep providing high-quality connections to March, DNA’s customers had the second-highest mobile support the growing use of devices and digital services . data usage per subscription in the world, averaging 20 8. DNA’s 4G network reaches almost 100% of the population gigabytes per month . In 2018, the average figure was in mainland Finland . In the second quarter of 2019, mobile 15 9. gigabytes . As usual, DNA’s customers were among data volumes in DNA’s network were up 19% year-on-year . the highest users of mobile data in Europe in 2018 . In In April–June, 93% of all mobile data was transferred in the April–June 2019, the average mobile data usage of DNA’s 4G network . customers per month reached 23 .5 gigabytes . The new 5G networks and services will accelerate the use of mobile DNA has been systematically preparing its mobile network data further and will also extend it into new applications for 5G with the introduction of 5G-capable technology and increased network capacity . As a result, data speeds in the * Tefficient’s report #1 2019 https://tefficient c. om/all-operators-climbed-the-tree-46- turned-usage-growth-into-arpu-growth/ Tefficient is an international telecommunications 4G network have improved despite the growth of traffic specialist providing analysis, benchmarks and consulting services . volumes . 5G technology tests got under way towards the end of 2018 according to plan . DNA’s mobile network is NB-IoT ready . DNA introduced LTE-M technology in its DNA acquired ICT Elmo Oy’s consumer business network in May, which makes it possible to introduce new and extensive fibre optic network in the types of IoT services . DNA’s M2M subscription base was Tampere region boosted by building automation systems, the energy sector On 31 May 2019, DNA announced the acquisition of and the Internet of Things (IoT) . ICT Elmo Oy’s consumer business and extensive fibre optic network (some 1,700 km of fibre-optic cable) . The In March, the network upgrade that started in the autumn acquisition will strengthen DNA’s market position in the of 2018 was completed in the cities of Turku and Tampere . Tampere region . The net sales of the acquired business DNA’s network was upgraded to higher performance and in 2018 was around EUR 8 million DNA has been a major 5G deployment capability . With the introduction of new customer of ICT Elmo’s operator business . The total frequencies and the latest, 5G capable radio network acquisition price is EUR 27 5. million, which equates to technology, transfer speeds in the network have more than an EV/EBITDA of approximately 6 1x. with cost synergies doubled . According to a benchmarking of data speeds considered . DNA will be taking over fewer than 20 completed in May, DNA’s 4G network had the best average members of ICT Elmo’s staff . The acquired business will data speeds in 20 major cities and the most popular ski not have a significant impact on DNA’s net sales or EBITDA resorts in Finland as well as along the roads connecting in 2019 . The acquired business operations have been these . (Omnitele 05/2019) consolidated into DNA’s figures as of the beginning of June .

In March, DNA started a comprehensive upgrade of mobile and fixed networks in the Heinola region . During the works, DNA will deploy several new base stations in the mobile network and will expand the fibre optic network . After the upgrade, the network in the Heinola region will be ready for 5G deployment . The introduction of new technology means that the services implemented with the old copper- based technology will be discontinued . After the upgrade is complete, fixed voice and xDSL services will no longer be available .

DNA Plc Half-Year Financial Report January–June 2019 14

Personnel

Personnel by business segment

30 June 2019 30 June 2018 Change-% 31 December 2018

Consumer Business 946 935 1 .2 913 Corporate Business 702 676 3 8. 677 Total personnel 1,648 1,611 2.3 1,590

At the end of June 2019, DNA Group had 1,648 employees One of DNA’s strategic objectives is being a great place (1,611), of which 651 were women (645) and 997 men (966) . to work . Satisfied, motivated and qualified employees are The increase in the number of personnel relates mainly to a crucial foundation for DNA’s ability to provide the best acquisitions made during the reporting period as well as to customer service on the market . In February 2019, DNA was seasonal workers in different divisions in summer time . chosen the best workplace in Finland by the Great Place to Work institute in the category of large organisations . In Salaries and employee benefit expenses paid during the June, GPTW ranked DNA as one of the best employers in second quarter amounted to EUR 28 4. million (27 1. million) . Europe .

Significant litigation matters

The processing of the claim related to the trademark dispute between Deutsche Telekom AG and DNA continues at Helsinki District Court .

Change in DNA’s Executive Team

In May, M S. c . (Tech) (b . 1972) Olli Sirkka was appointed as Olli Sirkka will resume his new responsibilities by Senior Vice President, Corporate Business and a member September 2019 . Johan Flykt, Vice President, Corporate of the Executive Team of DNA Plc . Olli Sirkka is responsible Sales, is acting as Senior Vice President, Corporate for DNA’s Corporate Business division and its development, Business until then . and he will report directly to the CEO . He is taking over from Hannu Rokka, who left the company in February .

DNA Plc Half-Year Financial Report January–June 2019 15

Decisions of the Annual General Meeting

DNA’s Annual General Meeting was held in Helsinki on Authorised Public Accountants Ernst & Young was elected 28 March 2019 . In total, 476 shareholders were present or as the company’s auditor . APA Terhi Mäkinen acts as the represented at the meeting, representing 79% of the votes . principal auditor . The AGM adopted the financial statements and discharged the Board of Directors and the CEO from liability for the The AGM approved the proposal of the Board of Directors financial period 2018 . to authorise the Board to decide on the repurchase of own shares of the company, as well as to decide on a share Dividend was confirmed to be EUR 0 7. 0 per share and issue, to dispose of own shares held by the company and additional dividend EUR 0 40. per share, in total EUR 1 1. 0 per an issue of special rights . share . The dividend was paid on 10 April 2019 . The minutes of the General Meeting are available at The AGM approved the Nomination Committee’s www dna. .fi/agm . proposal of 21 January 2019 concerning the election and remuneration of Board members . The number of Board At the constitutive meeting of the Board of Directors held members was confirmed to be seven . Re-elected members after the Annual General Meeting, Pertti Korhonen was include Pertti Korhonen, Anu Nissinen, Tero Ojanperä, elected Chairman, and members of the Audit Committee Jukka Ottela and Kirsi Sormunen . Anni Ronkainen and Ted and the Personnel Committee were elected from among Roberts were elected as new board members . The term of the Board members . Audit Committee members are Kirsi office of the Board members expires at the end of the next Sormunen (Chair), Jukka Ottela, Ted Roberts and Tero AGM . Ojanperä . Personnel Committee members are Pertti Korhonen (Chair), Anni Ronkainen, Anu Nissinen and Jukka The AGM decided not to change the remunerations paid Ottela . to the members of the Board of Directors . The Chairman of the Board is paid an annual remuneration of EUR 144,000 and each Board member EUR 48,000 . Further, it was confirmed that the meeting fee per Board meeting will be EUR 1,050 . The meeting fees of permanent committees of the Board were confirmed to be EUR 1,050 per meeting to Committee Chairs and EUR 525 to committee members .

DNA Plc Half-Year Financial Report January–June 2019 16

Shares and shareholders

Shares Finda Oy and PHP Holding Oy’s General Meetings DNA’s share is traded on Nasdaq Helsinki (the Helsinki approved the acquisition on 6 May 2019 and European Stock Exchange) . On 30 June 2019, DNA’s registered Commission approved the transaction on 15 July . Finnish shares totalled 132,303,500 (132,303,500) and the share regulatory approval is expected to get during August 2019 . capital registered in the Finnish Trade Register amounted Completion of the transaction will trigger a mandatory to EUR 72,702,225 65. (EUR 72,702,225 65). . At the end of public tender offer for the remaining outstanding shares June, the Group held 121,316 treasury shares . In March in DNA by Telenor . Telenor has announced that the cash 2019, a total of 61,473 treasury shares were handed over to consideration per share to be offered in the mandatory participants of the Group’s long-term share-based reward tender offer will be EUR 20 .90 . system (Bridge Plan 2018) . During the review period, DNA received no flagging In January–June 2019, a total of 28,256 million DNA shares, notifications according to Chapter 9, Section 5 of the totalling EUR 555 million, were traded on the Nasdaq Securities Markets Act . Helsinki Stock Exchange . The highest quotation was EUR 21 46. and the lowest EUR 16 .52 . The average rate was EUR 19 64. and volume-weighted average rate EUR 18 65. . Share-based reward systems The closing quotation on the last trading day of the review period, 28 June 2019, was EUR 21 0. 0 and the market DNA has a Performance Share Plan (PSP) for senior capitalisation (without DNA’s holding of its own shares) was management and other key employees . The plan has three EUR 2 7. 76 billion (EUR 2 .257 billion at end of 2018) . three-year earning periods: 2017–2019, 2018–2020 and 2019–2021 . In addition, DNA has a Restricted Share Plan (RSP) . See note 10 for more information on DNA’s share- Shareholders and flagging notifications based incentive schemes . At the end of the review period, the number of registered shareholders totalled 13,927, nominee registrations included Matching share plan for DNA personnel (12) . The proportion of nominee registrations and direct foreign shareholders at the end of 2018 was 27 43. % . In December 2018, the Board of Directors of DNA Plc decided on the establishment of a matching share plan for On 30 June 2019, the largest shareholders of DNA Plc were all DNA employees . In March 2019, the Board decided on Find Telecoms Oy (28 .26%), PHP Holding Oy (25 78. %) and the terms of the first earning period of 2019–2020 . In total, Ilmarinen Mutual Pension Insurance Company (3 49. %) . At 57% of DNA’s employees have registered to participate in the end of the review period, they held a total of 57 53%. of the plan . The total amount of all savings of the plan period DNA’s shares and voting rights . 1 April 2019 to 31 March 2020 may not exceed 5,000,000 euros . The Board of Directors will resolve on the potential In April, Norwegian telecommunications Group Telenor following plan periods and their details separately . announced that it will acquire 54% of the shares of DNA Plc . Telenor has signed separate agreements with DNA’s two largest shareholders, Finda Telecoms and PHP Holding . Finda Telecoms holds 28 3%. and PHP Holding 25 8. % of the shares in the company .

DNA Plc Half-Year Financial Report January–June 2019 17

DNA’s financial objectives and dividend policy

In February, DNA updated its medium-term objectives with DNA’s dividend policy: DNA’s goal is to pay a growing respect to EBITDA margin and profit distribution policy . dividend to its shareholders or by other means to return The new EBITDA margin goal was set with consideration to capital equalling 80-100% of the net profit for the period . the impact of the adoption of IFRS 16 from the beginning In addition, the Board of Directors may consider the of 2019, which is estimated to have a positive impact of distribution of excess profit to shareholders for a specific approximately EUR 17 million in EBITDA in 2019 . The impact financial period . When making the profit distribution of IFRS 16 on operating result (EBIT) is insignificant . decision, the Board of Directors will take into account the company’s financial status and financial position as well as DNA’s medium-term financial objectives: future funding needs and financial objectives . ■■ net sales growth faster than average market growth ■■ EBITDA margin of at least 34% ■■ operative capital expenditure less than 15% of net sales (excluding annual cash instalments for capitalized licence payments and the impact of IFRS 16) ■■ net debt/EBITDA ratio of less than 2 0. which may be temporarily exceeded if DNA finds attractive opportunities that allow the company to complement its offering in existing markets .

Corporate responsibility

DNA continued to implement its updated corporate DNA also launched a responsibility programme to promote responsibility strategy in the first half of 2019 . DNA’s digital inclusion in Finland by supporting the work of SOS responsibility strategy has four key areas: digital inclusion, Children’s Villages Finland, HelsinkiMissio and Hope to being a great place to work, climate-friendly operations prevent digital exclusion of children and the young, senior and good governance . citizens as well as low-income families .

DNA’s key climate objective is to reduce energy indirect In April, the Sustainable Brand Index study selected DNA greenhouse gas emissions (Scope 2) by 100% by 2023 from the most responsible company in its industry . the level reported in 2014 . In the first half of 2019, special focus was on further development of emissions calculations at DNA .

DNA Plc Half-Year Financial Report January–June 2019 18

Events after the reporting period

Telenor’s offer on DNA’s shares DNA is selling its terrestrial network pending Finnish regulatory approval pay-TV business to Digita European Commission approved Telenor’s offer on DNA’s On 17 July, DNA announced divestment of its terrestrial TV shares on 15 July . The completion of the transaction is network pay-TV business to Digita Oy on 1 January 2020 . subject to Finnish regulatory approval, and Telenor expects DNA will continue its operations as the leading pay-TV to get the approval in August . operator in the cable and broadband networks . The deal still requires the approval of the competition authorities, Norwegian telecommunications company Telenor Group which is expected in the autumn of 2019 . The parties will announced 9th of April that it will acquire DNA's two not be disclosing the sale price . largest owners', Finda Telecoms Oy and PHP Holding Oy's, shares of DNA Plc, in total 54% of the shares .

DNA Plc Half-Year Financial Report January–June 2019 19

Near-term risks and uncertainties

According to the company, there have been no significant Use of mobile devices that have a constant network changes in near-term risks and uncertainties connection is increasing strongly among both business in the review period . and private users . The Internet of Things (IoT) will further expand the volume of data traffic . As the IoT becomes more common, for example through the introduction of Strategic and operative risks new kinds of smart devices, the role of good information security, data security and high operational network The Finnish telecommunications market is characterised reliability gain in importance . Uncertainty in global trade by tough competition between established operators, policies may have an impact on DNA’s subcontractors and and a high degree of penetration of telecommunications partners and their product availability, service quality and solutions . DNA mainly operates in Finland, a market where, reliability as well as on our customers’ behaviour . for instance, the number of mobile phones per capita is among the highest in the world, which limits the prospects of future growth in the number of subscriptions . Regulatory risks DNA analyses changes in the operating environment Both national and EU regulation have significant impact on and the resulting possible new business opportunities, the operation of the telecommunications market in Finland . which always involve higher risks than conventional and Regulatory influence on the price level of DNA’s products established business operations . and services as well as the wholesale products that DNA procures from other operators and the criteria used in International players have a strong presence in the distributing frequencies, may have a significant impact on competitive environment of TV and entertainment services . DNA’s business . DNA’s competitors include traditional operators, but increasingly also OTT (over-the-top) service providers that Regulatory initiatives indicating significant risks to DNA deliver content over the Internet to mobile devices . The include the national implementation of the new European role of media companies’ own distribution channels and Electronic Communications Code, EU regulation on the services is also becoming more important . data protection of electronic communications and authority decisions on significant market power (SMP) . The ongoing shift in media use will provide both new risks and opportunities, for example while content rights are being negotiated . DNA monitors the TV and entertainment Financing risks service market intensively and continuously enhances its In order to manage the interest rate risk, the Group’s service offering to anticipate changes in the market . borrowings have been spread between fixed- and variable-rate instruments . In order to manage liquidity risk, The nature of DNA’s operations and customer requirements in addition to liquid assets the Group uses credit limits . place high demands on DNA’s information systems and To manage customer credit risk, the credit history of new network infrastructure . DNA’s business is capital-intensive, customers is checked as part of the ordering process . and continuous maintenance and improvement of the The Group’s foreign interest risk is insignificant, since the Group’s network infrastructure is essentially linked to its majority of its cash flow is euro denominated . success .

DNA makes significant investments in high-quality data systems and data analytics tools to deepen customer Damage risk understanding and to create a good omnichannel customer In anticipation of possible unforeseen damage risks, DNA experience . DNA’s business operations are dependent on has continuous insurance policies covering aspects of information systems, which involve several interconnected its operations including personnel, property, business risks but also provide business-critical opportunities for interruption, third-party liability and criminal action . There utilising data . is a specific insurance in place for cyber damage risks . Damage risks are prevented and minimised by means such as security guidelines and personnel training .

DNA Plc Half-Year Financial Report January–June 2019 20

Outlook for 2019

Market outlook According to the Bank of Finland, the Finnish economy The demand for Industrial Internet solutions and M2M will continue to expand, but growth has passed its cyclical (Machine to Machine) subscriptions is expected to grow . peak . We expect the mobile network service market As the IoT becomes more common, the role of good growth to slow down and competition to remain intense for information security, data security and high operational mobile communication services . network reliability gain in importance .

Mobile data use will continue to grow as private and DNA sees fixed wireless broadband access as one of the business users increase their use of digital services and first applications to strongly benefit from 5G technology . OTT video services . This trend will expand the number of This makes high-quality connections possible for buildings high-speed 4G subscriptions as well as mobile data usage without ready access to a fibre optic connection or where per subscription . The share of 4G subscriptions in DNA’s acquiring a fibre optic connection would be prohibitively mobile subscription base is expected to grow, but at a more expensive . In the 2020s, 5G technology is likely to have a moderate rate . We expect the sales of 5G subscriptions to broad range of other applications in areas such as smart start towards the end of 2019 . traffic and health care .

Use of mobile devices that have a constant network connection and IP-based communication solutions is DNA’s guidance for 2019 increasing strongly among both business and private users . DNA’s net sales in 2019 is expected to remain at the same level as in 2018, and EBITDA in 2019 is expected to increase In the mobile communication network, the volume of SMS substantially from 2018 . DNA’s financial position and and voice traffic is expected to continue to fall . The decline liquidity are expected to remain at a healthy level . of the market for fixed-network voice services is expected to continue . DNA’s guidance for 2019 is disclosed with consideration to the impact of the adoption of IFRS 16 . The adoption of In the consumer market, demand for fast broadband IFRS 16 from the beginning of 2019 is estimated to have a subscriptions and entertainment services is expected to positive impact of approximately EUR 17 million in EBITDA increase, driven in particular by the popularity of streaming in 2019 . The impact of IFRS 16 on operating result (EBIT) is and on-demand video services . The demand for traditional insignificant . pay-TV services is expected to decline further .

Fixed-network broadband customers are expected to DNA Plc continue to switch to housing association broadband Board of Directors subscriptions and faster speeds . The fixed-network broadband subscription base is expected to remain at its current level . Growing use of services such as cloud and entertainment services increases the demand for high-speed and high-performance networks .

Private and public-sector organisations are digitising their services and creating new digital business, which makes the availability of networks and services vital . More mobile and versatile ways of working will boost demand for services such as cloud and video conference services . Companies transfer their applications to the cloud to increase their operational efficiency, which will boost the demand for secure high-speed connections .

DNA Plc Half-Year Financial Report January–June 2019 21

Group key figures

1 Apr–30 Jun 1 Apr–30 Jun 1 Jan–30 Jun 1 Jan–30 Jun 1 Jan–31 Dec 2019 2018 2019 2018 2018

Earnings per share, basic EUR 0.19 0 .20 0.39 0 .39 0 7. 7 Earnings per share, diluted EUR 0.19 0 .20 0.39 0 .39 0 7. 7 Equity per share, EUR 3.88 4 18. 4 .58 Shares outstanding at the end of the period (thousands) 132,182 132,121 132,121 Weighted average adjusted number of shares during the financial period, basic (thousands) 132,039 132,039 132,039 132,039 132,039 Weighted average adjusted number of shares during the financial period, diluted (thousands) 132,132 132,072 132,129 132,070 132,151 Net debt, EUR in thousands 607,513 418,909 379,273 Net gearing, % 118.5 75 8. 62 7. Equity ratio, % 36.7 45 .2 46 9. Net debt/EBITDA 1.95 1 44. 1.97 1 46. 1 .33 Return on investment (ROI), % 12.6 14 6. 12.6 14 .5 14 1. Return on equity (ROE), % 20.8 20 0. 18.4 17 .2 16 4. Capital expenditure, EUR in thousands 25,213 30,645 57,347 50,535 138,271 Capital expenditure, % of net sales 10.9 13 6. 12.4 11 .3 15 .2 Personnel at end of period 1,648 1,611 1,590

Reconciliation of comparable key figures

There were no items affecting comparability of EBITDA or operating result in the review or reference period .

DNA Plc Half-Year Financial Report January–June 2019 22

Free cash flow to equity

1 Jan–30 Jun 1 Jan–30 Jun 1 Jan–31 Dec EUR in thousands 2019 2018 2018

Comparable EBITDA 153,909 143,252 284,921 Operative capital expenditure –41,975 –46,135 –133,871 Operating free cash flow 111,934 97,116 151,050 Interest paid, net –6,829 –15,509 –16,942 Income taxes, paid –14,848 –1,953 –12,428 Adjusted change in net working capital –43,688 –50,818 –47,687 Change in provisions 24 –1,537 –2,034 Free cash flow to equity 46,592 27,299 71,959

Key operative indicators

Mobile communication network subscription volumes: Number of: 30 Jun 2019 30 Jun 2018 31 Dec 2018

Subscriptions* 2,807,000 2,827,000 2,877,000

*Includes only mobile broadband

1 Apr–30 Jun 1 Apr–30 Jun 1 Jan–30 Jun 1 Jan–30 Jun 1 Jan–31 Dec 2019 2018 2019 2018 2018

Revenue per subscription (ARPU), EUR** 18.6 18 4. 18.5 18 7. 18 7. Customer churn rate, %** 13.7 15 4. 15.5 17 1. 16 .2

**Includes only postpaid phone subscriptions

Fixed-network subscription volumes: Number of: 30 Jun 2019 30 Jun 2018 31 Dec 2018

Broadband subscriptions 530,000 470,000 481,000

Cable TV subscriptions 661,000 622,000 630,000 Telephone subscriptions 36,000 45,000 41,000 1,227,000 1,137,000 1,152,000

DNA Plc Half-Year Financial Report January–June 2019 23

Calculation of key figures

Net result for the period Earnings per share (EUR) = Weighted number of shares during the financial period excl treasury shares

Equity attributable to owners of the parent Equity per share, EUR = Number of outstanding shares at end of period

Net debt, EUR = Non-current and current borrowings – cash and cash equivalents

Net debt Net gearing, % = Total equity

Total equity Equity ratio, % = Total assets – advances received

EBITDA, EUR = Operating result (EBIT) + depreciation, amortisation and impairments

Net result before income taxes + finance expense Return on investment (ROI), % * = Total equity + borrowings (average for the period)

Net result for the period Return on equity (ROE), % * = Total equity (average for the period)

Net debt Net debt/EBITDA* = Operating result + depreciation + amortisation + impairments

Comparable EBITDA (EUR) = EBITDA excluding items affecting comparability

Comparable operating result, EBIT (EUR) = Operating result, EBIT excluding items affecting comparability

Items affecting comparability = Items affecting comparability being material items outside ordinary course of business such as net gain or losses from business disposals, direct transaction costs related to business acquisitions, write-off of non-current assets, costs for closure of business operations and restructurings, fines, damages and other similar payments .

Cashflow after investing activities (EUR) = Net cash generated from operating activities + net cash used in investing activities

* 12-month adjusted

DNA Plc Half-Year Financial Report January–June 2019 24

Calculation of key figures

Capital expenditure (EUR) = Capital expenditure comprises additions to property, plant and equipment and intangible assets excluding business acquisitions, gross acquisition cost of spectrum license and additions through finance leases and asset retirement obligations and including annual cash instalments for the spectrum license and without lease investments (IFRS 16) .

Operative capital expenditure = Operative capital expenditure is reported capital expenditure without annual cash instalments for spectrum licenses .

Operating free cashflow = Comparable EBITDA – operative capital expenditure

Free Cash Flow to Equity (FCFE) = Comparable EBITDA – total capital expenditure excluding the annual cash instalment for spectrum licenses – change in net working capital including an adjustment between operative capex and cash-based capex in order to present FCFE on a cash basis, however excluding cash instalments for spectrum licenses and adjusted with the items affecting comparability – net interest paid – income taxes paid – change in provisions excluding items affecting comparability .

DNA presents alternative performance measures as understanding of DNA’s results of operations . Net debt, additional information to financial measures presented ratio of net debt to EBITDA, net gearing, equity ratio, in the consolidated income statement, consolidated return on equity and return on investment are presented statement of financial position and consolidated statement as complementing measures because, in DNA’s view, they of cash flows prepared in accordance with IFRS . In DNA’s are useful measures of DNA’s ability to obtain financing view, alternative performance measures provide significant and service its debts . Capital expenditure, operative capital additional information on DNA’s results of operations, expenditure, cash flow after investing activities, operating financial position and cash flows and are widely used by free cash flow and free cash flow to equity provide also analysts, investors and other parties . additional information of the cash flow needs of DNA’s operations . DNA presents comparable EBITDA and comparable EBIT, which have been adjusted with material items outside Alternative performance measures should not be viewed in of ordinary course of business to improve comparability isolation or as a substitute to the IFRS financial measures . between periods . EBITDA, comparable EBITDA and All companies do not calculate alternative performance comparable EBIT are presented as complementing measures in a uniform way, and therefore DNA’s alternative measures to the measures included in the consolidated performance measures may not be comparable with income statement because, in DNA’s view, they increase similarly named measures presented by other companies .

DNA Plc Half-Year Financial Report January–June 2019 25

Quarterly information

EUR million Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

Net sales Consumer 158 6. 162 .2 162 .5 175 4. 165 .2 168 4. 171 8. 179 .5 173 6. 176 7. Corporate 54 8. 57 1. 56 .2 59 .2 57 1. 56 6. 55 7. 57 5. 55 .3 55 .3 Total 213 4. 219 .3 218 8. 234 6. 222 .3 225 0. 227 .5 236 .9 228 .9 232 0.

Mobile service revenue 100 .3 103 7. 106 8. 109 2. 112 .2 111 .5 114 7. 116 0. 118 .2 120 6.

EBITDA Consumer 50 7. 49 .3 53 1. 46 7. 53 4. 56 1. 59 .2 50 1. 57 6. 59 6. % of net sales 32 0%. 30 4%. 32 7%. 26 6%. 32 .3% 33 3%. 34 4. % 27 .9% 33 .2% 33 7%. Corporate 15 .2 18 .3 19 .5 19 0. 17 .3 16 .5 17 1. 15 .3 18 .5 18 .2 % of net sales 27 8. % 32 1. % 34 6%. 32 1. % 30 .2% 29 2%. 30 7%. 26 6%. 33 .5% 33 0%. Total 65 .9 67 6. 72 6. 65 7. 70 7. 72 6. 76 .3 65 4. 76 1. 7 7 8. % of net sales 30 9%. 30 8. % 33 .2% 28 0%. 31 8%. 32 .3% 33 .5% 27 6%. 33 .2% 33 6%.

Comparable EBITDA Consumer 50 7. 49 .3 53 1. 46 7. 53 4. 56 1. 59 .2 50 1. 57 6. 59 6. % of net sales 32 0%. 30 4%. 32 7%. 26 6%. 32 .3% 33 3%. 34 4. % 27 .9% 33 .2% 33 7%. Corporate 15 .2 18 .3 19 .5 19 0. 17 3. 16 5. 17 1. 15 .3 18 .5 18 .2 % of net sales 27 8. % 32 1. % 34 6%. 32 1. % 30 .2% 29 .2% 30 7%. 26 6%. 33 .5% 33 0%. Total 65 .9 67 6. 72 6. 65 7. 70 7. 72 6. 76 .3 65 4. 76 1. 7 7 8. % of net sales 30 .9% 30 8. % 33 .2% 28 0%. 31 8%. 32 .3% 33 .5% 27 6%. 33 .2% 33 6%.

Depreciation and amortisation Consumer 24 1. 24 1. 23 .5 23 .5 23 1. 23 .9 24 1. 24 0. 26 .5 26 8. Corporate 13 0. 13 1. 11 7. 15 .2 12 .3 12 8. 12 .9 12 .9 14 8. 15 .3 Total 37 1. 37 1. 35 .3 38 8. 35 4. 36 6. 37 0. 37 0. 41 .3 42 .2

Operating result/EBIT Consumer 26 6. 25 .3 29 .5 23 1. 30 .3 32 .2 35 1. 26 0. 31 1. 32 8. % of net sales 16 8%. 15 6%. 18 .2% 13 .2% 18 4%. 19 1%. 20 4%. 14 .5% 17 9. % 18 .5% Corporate 2 .2 5 2. 7 8. 3 7. 4 .9 3 7. 4 .2 2 4. 3 7. 2 .9 % of net sales 4 1%. 9 .2% 13 8%. 6 .3% 8 6%. 6 6%. 7 5. % 4 1%. 6 7%. 5 .3% Total 28 .9 30 .5 37 .3 26 .9 35 .2 36 0. 39 .3 28 4. 34 8. 35 7. % of net sales 13 5%. 13 .9% 17 0%. 11 .5% 15 8%. 16 0%. 17 .3% 12 0%. 15 .2% 15 4%.

Comparable operating result/ EBIT Consumer 26 6. 25 .3 29 .5 23 1. 30 .3 32 .2 35 1. 26 0. 31 1. 32 8. % of net sales 16 8%. 15 6%. 18 .2% 13 .2% 18 4%. 19 1%. 20 4%. 14 .5% 17 .9% 18 5%. Corporate 2 .2 5 2. 7 8. 6 8. 4 .9 3 7. 4 .2 2 4. 3 7. 2 .9 % of net sales 4 1%. 9 .2% 13 8%. 11 .5% 8 6%. 6 6%. 7 .5% 4 1%. 6 7%. 5 .3% Total 28 .9 30 5. 37 3. 29 .9 35 .2 36 0. 39 .3 28 4. 34 8. 35 7. % of net sales 13 5%. 13 .9% 17 0%. 12 8%. 15 8%. 16 0%. 17 .3% 12 0%. 15 .2% 15 4%.

Items affecting comparability Consumer ------Corporate --- 3 1. ------Total --- 3 1. ------

DNA Plc Half-Year Financial Report January–June 2019 26

Quarterly information

EUR million Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

Capital expenditure Consumer 14 4. 15 6. 15 4. 51 .5 13 .3 20 .3 22 8. 36 4. 18 .3 13 6. Corporate 5 8. 7 6. 8 0. 21 9. 6 5. 10 3. 11 .2 17 .3 13 8. 11 6. Un-allocated 1 0. 1 1. 0 9. 0 7. ------Total 21 2. 24 4. 24 4. 74 1. 19 .9 30 6. 34 0. 53 7. 32 1. 25 .2

Personnel Consumer 1,002 984 972 942 936 935 934 913 902 946 Corporate 682 682 664 659 663 676 673 677 703 702 Total 1,684 1,666 1,636 1,601 1,599 1,611 1,607 1,590 1,605 1,648

Mobile revenue per user (ARPU) Consumer 18 .9 19 7. 20 1. 20 4. 20 4. 20 3. 20 4. 20 4. 19 7. 20 0. Corporate 13 8. 13 .9 13 .2 14 0. 13 7. 11 .9 13 .3 13 6. 13 4. 13 6. Total 17 8. 18 .5 18 .5 19 0. 18 .9 18 4. 18 8. 18 .9 18 .3 18 6.

Mobile subscription turnover rate (CHURN) 21 0%. 15 4%. 19 1%. 18 1%. 18 .9% 15 4%. 15 8%. 14 8. % 17 .2% 13 7%.

DNA Plc Half-Year Financial Report January–June 2019 Half-Year, Financial Report

Consolidated income statement

1 Apr– 1 Apr– 1 Jan– 1 Jan– 1 Jan– EUR in thousands 30 Jun 2019 30 Jun 2018 30 Jun 2019 30 Jun 2018 31 Dec 2018

Net sales 232,022 224,966 460,906 447,312 911,758 Other operating income 1,009 882 1,865 1,665 3,804 Materials and services –97,338 –96,009 –194,921 –191,478 –398,661 Employee benefit expenses –28,445 –27,079 –56,301 –54,317 –107,388 Depreciation, amortisation and impairments –42,150 –36,627 –83,400 –72,042 –146,023 Other operating expenses –29,398 –30,158 –57,640 –59,930 –124,592 Operating result, EBIT 35,699 35,974 70,508 71,210 138,898

Finance income 116 146 233 244 523 Finance expense –2,378 –2,370 –5,135 –7,094 –11,700 Share of associates' results - 6 - 12 14 Net result before income tax 33,437 33,756 65,606 64,373 1 27,7 36

Income tax expense –7,277 –6,772 –14,160 –12,941 –25,502 Net result for the period 26,160 26,984 51,446 51,432 102,234 Attributable to: Owners of the parent 26,160 26,984 51,446 51,432 102,234

Earnings per share for net result attributable to owners of the parent: Earnings per share, basic EUR 0 19. 0 .20 0 .39 0 .39 0 7. 7 Earnings per share, diluted EUR 0 19. 0 .20 0 .39 0 .39 0 7. 7

Notes are an integral part of the consolidated financial statements .

DNA Plc Half-Year Financial Report January–June 2019 28

Consolidated statement of comprehensive income

1 Apr– 1 Apr– 1 Jan– 1 Jan– 1 Jan– EUR in thousands 30 Jun 2019 30 Jun 2018 30 Jun 2019 30 Jun 2018 31 Dec 2018

Net result for the period 26,160 26,984 51,446 51,432 102,234 Items that will not be reclassified to profit or loss: Remeasurements of post employment benefit obligations –34 - –34 - 249 Other comprehensive income, net of tax –34 - –34 - 249 Total comprehensive income 26,126 26,984 51,412 51,432 102,483 Attributable to: Owners of the parent 26,126 26,984 51,412 51,432 102,483

Notes are an integral part of the consolidated financial statements .

DNA Plc Half-Year Financial Report January–June 2019 29

Consolidated statement of financial position

EUR in thousands 30 Jun 2019 30 Jun 2018 31 Dec 2018

ASSETS Non-current assets Goodwill 338,706 327,206 327,206 Other intangible assets 192,036 170,614 191,783 Property, plant and equipment 413,183 399,003 412,550 Right-of-use assets 82,147 - - Investments in associates 1,205 1,207 1,209 Other investments 117 117 117 Trade and other receivables 72,102 71,815 76,026 Contract assets 2,366 - - Deferred tax assets 7,662 7,896 7,691 Total non-current assets 1,109,523 977,858 1,016,582

Current assets Inventories 29,225 27,483 31,681 Trade and other receivables 240,739 220,995 243,652 Contract assets 3,218 1,372 972 Cash and cash equivalents 36,614 23,575 22,654 Total current assets 309,797 273,425 298,960 Total assets 1,419,319 1,251,283 1,315,541

Equity Equity attributable to owners of the parent Share capital 72,702 72,702 72,702 Reserve for invested unrestricted equity 506,079 506,079 506,079 Treasury shares –1,728 –2,806 –2,806 Retained earnings –115,613 –74,899 –73,439 Net result for the period 51,446 51,432 102,234 Total equity 512,886 552,509 604,770

LIABILITIES Non-current liabilities Borrowings 379,937 312,546 348,090 Lease liabilities 64,475 - - Contract liabilities 1,469 1,616 1,809 Employment benefit obligations 1,737 2,021 1,714 Provisions 4,886 5,315 5,307 Deferred tax liabilities 34,495 33,680 34,825 Other non-current liabilities 24,490 16,997 33,169 Total non-current liabilities 511,489 372,175 424,914

Current liabilities Borrowings 183,971 129,938 53,837 Lease liabilities 15,744 - - Contract liabilities 3,065 2,945 3,313 Provisions 208 458 277 Trade and other payables 187,545 189,000 223,374 Income tax liabilities 4,410 4,258 5,056 Total current liabilities 394,944 326,599 285,857

Total equity and liabilities 1,419,319 1,251,283 1,315,541

Notes are an integral part of the consolidated financial statements .

DNA Plc Half-Year Financial Report January–June 2019 30

Consolidated statement of cash flows

1 Jan– 1 Jan– 1 Jan–31 Dec EUR in thousands 30 Jun 2019 30 Jun 2018 2018

Cash flows from operating activities Net result for the period 51,446 51,432 102,234

Adjustments 1) 102,480 90,061 180,329 Change in net working capital 2) –23,198 –36,843 –45,100 Dividends received 12 10 10 Interest paid –5,305 –5,176 –6,438 Interest received 176 131 335 Other financial items –1,700 –10,465 –10,839 Income taxes paid –14,848 –1,953 –12,428

Net cash generated from operating activities 109,062 87,1 98 208,104

Cash flows from investing activities

Investments in property, plant and equipment (PPE) and intangible assets –58,209 –64,511 –145,058 Proceeds from sale of PPE 13 261 402 Business combinations –42,415 -

Net cash used in investing activities –100,610 –64,250 –144,657

Cash flows from financing activities

Direct costs relating to share issue - - –3,314 Dividends paid –145,400 –145,333 –145,333 Proceeds from borrowings 509,505 519,930 859,880 Repayment of borrowings –349,941 –397,562 –778,932 Repayment of lease liabilities –8,656 - -

Net cash used in financing activities 5,508 –22,965 –64,385

Change in cash and cash equivalents 13,960 –17 –937 Cash and cash equivalents at beginning of period 22,654 23,592 23,592 Cash and cash equivalents at end of period 36,614 23,575 22,654

Adjustments 1): Depreciation, amortisation and impairment 83,400 72,042 146,023 Gains and losses on disposals of non-current assets –6 –221 –324 Other non-cash income and expense - –12 –14 Finance income and expense 4,902 6,850 11,177 Income tax expense 14,160 12,941 25,502 Change in provisions 24 –1,537 –2,034 Total adjustment 102,481 90,061 180,329

Change in net working capital 2): Change in trade and other receivables 1,211 –1,087 –27,678 Change in inventories 2,456 –4,575 –8,772 Change in trade and other payables –26,865 –31,182 –8,649 Change in net working capital –23,198 –36,843 –45,100

Notes are an integral part of the consolidated financial statements .

DNA Plc Half-Year Financial Report January–June 2019 31

Consolidated statement of changes in equity

Reserve for invested Share unrestricted Treasury Retained Total EUR in thousands capital equity shares earnings equity

1 January 2018 72,702 653,056 –4,055 –75,619 646,085 Comprehensive income Net result for the period 102,234 102,234 Other comprehensive income Total other comprehensive income, net of tax 249 249 Total comprehensive income - - - 102,483 102,483 Transactions with owners Reclassification –62,420 62,420 - Share-based payments 1,250 285 1,535 Dividends relating to 2017 –60,776 –60,776 Capital payment –84,557 –84,557 Total contribution by and distributions to owners - –146,977 1,250 1,930 –143,797 31 December 2018 72,702 506,079 –2,806 28,794 604,770 1 January 2019 72,702 506,079 –2,806 28,794 604,770 Comprehensive income Net result for the period 51,446 51,446 Other comprehensive income Total other comprehensive income, net of tax –34 –34 Total comprehensive income - - - 51,412 51,412 Transactions with owners Share-based payments 1,078 1,027 2,104 Dividends relating to 2018 –145,400 –145,400 Total contribution by and distributions to owners - - 1,078 –144,374 –143,296 30 June 2019 72,702 506,079 –1,728 –64,168 512,886

Notes are an integral part of the consolidated financial statements .

DNA Plc Half-Year Financial Report January–June 2019 32

Notes

1 Accounting principles...... 33 2 Revenue...... 34 3 Segment information...... 36 4 Capital expenditure...... 38 5 Equity...... 39 6 Borrowings ...... 40 7 Net debt...... 41 8 Provisions ...... 42 9 Related party transactions...... 43 10 Share-based payments...... 44 11 Business combinations ...... 47 12 Changes in accounting policy IFRS 16...... 48 13 Events after the review date...... 51

DNA Plc Half-Year Financial Report January–June 2019 33

1 Accounting principles

This Half Year Financial Report has been prepared in recognised as an expense in the income statement and accordance with IFRS regulations and measurement included in the notes to the financial statements . principles and complies with the requirements of the DNA Plc mostly acts as a lessee . The Group enters into IAS 34 standard . The information has been prepared agreements to lease office premises, equipment facilities in accordance with International Financial Reporting and aerial sites in particular . According to current Standards, as approved for application throughout the accounting practices, they are classified as operating lease European Union . The accounting principles are identical to agreements . For office premises, the average lease period those applied to the Financial Statements of 31 December is 2 to 5 years and for equipment facilities 4 to 7 years . 2018 with the exception of new and amended standards Due to the nature of leases, the Group currently estimates effective as of 1 January 2019 . This report should be read that the most essential impacts of the adoption of the in connection with the 2018 Financial Statements . The IFRS 16 standard will be related to leased premises and information presented in the report is unaudited . equipment spaces . In addition, the Group has individual major agreements related to technology which have an essential impact on the assets and liabilities on the balance The following new standard sheet . The Group subleases some premises, the leases of have been adopted as of 1 January 2019: which are reported as operating leases . The agreements On 13 January 2016, IASB published IFRS 16 Leases, are recognised as a right-of-use asset and lease liability effective for the financial period beginning on 1 January in accordance with IFRS 16 . Proceeds from the leasing 2019 . The changes introduced by the standard to the of the assets are presented in the notes to the financial recognition, valuation and presentation of leases mainly statements . Impairment testing will be carried out where apply to accounting by lessees . For lessors, the accounting necessary if there is any indication in the reassessment of of leases remains mostly as is . The lessor continues the agreements . to classify its leases as operating or finance leases in accordance with almost the same principles as in IAS 17 The relevant estimates and discretionary factors in the Leases . DNA adopted IFRS 16 on the effective date of 1 application of the standard are mainly related to the January 2019 using the modified retrospective transition assessment of the lease period and to the determination of method, and in accordance with the IFRS 16 transition the discount rate used . The discount rate is determined by guidance, comparative information will not be restated . using the additional borrowing rate and adjusted quarterly . The changes in the reclassification and recognition of Leases may include options for continuation or termination . agreements resulting from the standard have been entered At the Group's discretion, options will not be taken into in the opening balance sheet of 1 January 2019 . account in the assessment of the lease period unless the use of the option is reasonably certain . No residual value The standard is applied to leases previously identified guarantees are included in the leases . as leases under IAS 17 Leases and IFRIC 4 Determining Whether an Arrangement Contains a Lease . In the adoption Maintenance rents or other use-based payments included of IFRS 16, right-of-use assets have been recognised to in leases will be specified if they are relevant and can be reflect the amount corresponding to the discounted lease reliably separated from the agreement . After consideration, liabilit . The average weighted discount rate for lease DNA will not otherwise separate non-lease components liabilities was 2 .2% on 1 January 2019 . from associated lease components and will report lease components and non-lease components as a single lease The Group applies practical relief regarding short-term component . Leases that do not meet the definition of IFRS agreements . IFRS 16 is not applied to leases with a lease 16 are recognised as an expense during the duration of the term of 12 months or less . Short-term agreements are agreement .

DNA Plc Half-Year Financial Report January–June 2019 34

2 Revenue

The group revenue consists of income from contracts with customers . The Consumer segment revenue in Q2 2019 was EUR 176 7. million and the Corporate segment revenue was EUR 55 3. million . Segment revenue is derived from the transfer of goods and services in the following product lines over time and at a point in time :

1 Apr–30 Jun 2019 Mobile Mobile Service Mobile interconnection and Fixed Fixed EUR in thousands Revenue Equipment Inbound Roaming non-voice Voice Total

Timing of revenue recognition Point in time - 35,188 - 2,589 47 37,824 Over time 120,551 - 11,148 57,009 5,490 194,198 Total 120,551 35,188 11,148 59,598 5,537 232,022

1 Apr–30 Jun 2018 Mobile Mobile Service Mobile interconnection and Fixed Fixed EUR in thousands Revenue Equipment Inbound Roaming non-voice Voice Total

Timing of revenue recognition Point in time - 31,054 - 3,231 58 34,343 Over time 111,535 - 13,069 59,747 6,271 190,622 Total 111,535 31,054 13,069 62,979 6,328 224,966

1 Jan–30 Jun 2019 Mobile Mobile Service Mobile interconnection and Fixed Fixed EUR in thousands Revenue Equipment Inbound Roaming non-voice Voice Total

Timing of revenue recognition Point in time - 68,491 - 6,417 296 75,204 Over time 238,771 - 22,043 113,785 11,102 385,701 Total 238,771 68,491 22,043 120,202 11,398 460,906

1 Jan–30 Jun 2018 Mobile Mobile Service Mobile interconnection and Fixed Fixed EUR in thousands Revenue Equipment Inbound Roaming non-voice Voice Total

Timing of revenue recognition Point in time - 59,493 - 5,779 66 65,338 Over time 223,686 - 26,066 119,159 13,063 381,974 Total 223,686 59,493 26,066 124,938 13,128 447,312

DNA Plc Half-Year Financial Report January–June 2019 35

1 Jan–31 Dec 2018 Mobile Mobile Service Mobile interconnection and Fixed Fixed EUR in thousands Revenue Equipment Inbound Roaming non-voice Voice Total

Timing of revenue recognition Point in time - 133,646 - 12,877 81 146,604 Over time 454,427 - 51,495 235,269 23,964 765,155 Total 454,427 133,646 51,495 248,146 24,045 911,758

Mobile communication services comprise service revenue, for calls made by foreign mobile operators’ subscribers mobile network voice services, mobile broadband services, in Finland . Fixed-network revenue for services other M2M services and mobile virtual network operator (MVNO) than voice services comprises fixed broadband and data services . Mobile device revenue comprises the sales of services, TV and video services, corporate network value mobile devices such as mobile phones, tablets and dongles . added services as well as the sales of network equipment Mobile interconnection and roaming revenue comprises (e g. . PBX and LAN/WLAN equipment) . Fixed-network interconnection revenue, which DNA receives for calls voice services include all fixed-network voice services and made by other operators’ clients to DNA’s network, and related devices . roaming revenue, which DNA receives from other operators

DNA Plc Half-Year Financial Report January–June 2019 36

3 Segment information

1 Apr–30 Jun 2019

EUR in thousands Business segments Consumer segment Corporate segment Unallocated Group total

Net sales 176,720 55,302 232,022 EBITDA 59,608 18,241 7 7,849 Depreciation, amortisation and impairments 26,832 15,319 42,150 Operating result, EBIT 32,776 2,923 35,699 Net finance items –2,262 –2,262 Share of associates' results 0 0 Net result before income tax 33,437 Net result for the period 26,160 Capital expenditure* 13,648 11,565 - 25,213 Employees at end of period 946 702 - 1,648

1 Apr–30 Jun 2018

EUR in thousands Business segments Consumer segment Corporate segment Unallocated Group total Net sales 168,409 56,557 224,966 EBITDA 56,109 16,493 72,601 Depreciation, amortisation and impairments 23,859 12,769 36,627 Operating result, EBIT 32,250 3,724 35,974 Net finance items –2,224 –2,224 Share of associates' results 6 6 Net result before income tax 33,756 Net result for the period 26,984 Capital expenditure* 20,339 10,305 - 30,645 Employees at end of period 935 676 - 1,611

1 Jan–30 Jun 2019

EUR in thousands Business segments Consumer segment Corporate segment Unallocated Group total

Net sales 350,298 110,607 460,906 EBITDA 117,162 36,747 153,909 Depreciation, amortisation and impairments 53,307 30,093 83,400 Operating result, EBIT 63,855 6,653 70,508 Net finance items –4,902 –4,902 Share of associates' results 0 0 Net result before income tax 65,606 Net result for the period 51,446 Capital expenditure* 31,964 25,383 - 57,347 Employees at end of period 946 702 - 1,648

* Capital expenditure comprises additions to intangible and tangible assets, excluding business combinations, and additions relating to decommissioning obligations . Additionnally, capital expenditure includes capitalised spectrum license payments made during the reporting period .

DNA Plc Half-Year Financial Report January–June 2019 37

3 Segment information

1 Jan–30 Jun 2018

EUR in thousands Business segments Consumer segment Corporate segment Unallocated Group total

Net sales 333,639 113,673 447,312 EBITDA 109,503 33,749 143,252 Depreciation, amortisation and impairments 46,928 25,113 72,042 Operating result, EBIT 62,575 8,636 71,210 Net finance items –6,850 –6,850 Share of associates' results 12 12 Net result before income tax 64,373 Net result for the period 51,432 Capital expenditure* 33,688 16,848 - 50,535 Employees at end of period 935 676 - 1,611

1 Jan–31 Dec 2018

EUR in thousands Business segments Consumer segment Corporate segment Unallocated Group total Net sales 684,919 226,838 911,758 EBITDA 218,764 66,156 284,921 Depreciation, amortisation and impairments 95,049 50,974 146,023 Operating result, EBIT 123,716 15,182 138,898 Net finance items –11,177 –11,177 Share of associates' results 14 14 Net result before income tax 127,736 Net result for the period 102,234 Capital expenditure* 92,867 45,404 – 138,271 Employees at end of period 913 677 – 1,590

As key figures for business segments, in addition to business acquisitions, impairment of non-current assets, segment net sales, DNA presents comparable EBITDA and costs for closure of business operations and restructurings, comparable EBIT, which have been adjusted with material fines or other similar payments, damages as well as costs items outside of ordinary course of business to improve related to a one time study on the Company's strategic comparability between periods . DNA’s chief operative alternatives to grow its shareholder base, costs related to decision-maker assesses segment performance mainly the strategic assessment work of the Board of Directors as based on these key figures . Items affecting comparability well as direct transaction costs of and cost impacts of the include essential items such as net gain or losses from listing . business disposals, direct transaction costs related to

DNA Plc Half-Year Financial Report January–June 2019 38

4 Capital expenditure

1 Apr– 1 Apr– 1 Jan– 1 Jan– 1 Jan– EUR in thousands 30 Jun 2019 30 Jun 2018 30 Jun 2019 30 Jun 2018 31 Dec 2018

Capital expenditure* Intangible assets 6,906 9,123 24,576 19,173 38,753 Property, plant and equipment 18,307 21,522 32,771 31,362 99,518 Total 25,213 30,645 57,347 50,535 138,271

Major individual items included in capital expenditure are 4G network capacity expansion and development, 5G readiness as well as fibre optic networks and IT .

DNA Plc Half-Year Financial Report January–June 2019 39

5 Equity

Shares Total number Share capital Reserve for invested outstanding Treasury of shares (EUR in unrestricted equity (thousands) shares (thousands) (thousands) thousands) (EUR in thousands)

1 January 2018 132,039 265 132,304 72,702 653,056 Share issue 82 –82 Reclassification –62,420 Capital payment –84,557 31 December 2018 132,121 183 132,304 72,702 506,079 Share issue 61 –61 - - - 30 June 2019 132,182 121 132,304 72,702 506,079

DNA Plc has one type of share . The total number of shares After the transfer, DNA holds a total of 121,316 treasury is 132,303,500 (132,303,500) . The number of outstanding shares . shares is 132,182,184 (31 December 2018 132,120,711) . The shares do not have a nominal value . On 30 June 2019, DNA Amount Plc’s share capital amounted to EUR 72,702,226 . All issued Treasury shares 1 January 2019 182,789 shares have been paid in full . 1 March 2019 Share issue - share-based incentive scheme –61,473 Treasury shares 31 December 2019 121,316 Dividends DNA Plc's Annual General Meeting of 28 March 2019 Treasury shares represent 0 09. per cent of the votes . approved a payment of dividend (EUR 0 7. 0 per share) as well as an additional dividend (EUR 0 40. per share) . In total, paid dividends amounted to EUR 1 1. 0 per share . The dividend was paid on 10 April 2019 .

Treasury shares Based on the Board of Directors' decision, DNA Plc has 1 March 2019 transferred 61,473 of the company's treasury shares to persons belonging to the share- based remuneration scheme, Bridge Plan 2018 for the performance period 2018, as settlement in accordance with the plan rules .

DNA Plc Half-Year Financial Report January–June 2019 40

6 Borrowings

EUR in thousands 30 June 2019 30 June 2018 31 December 2018

Non-current borrowings Loans from financial institutions 77,367 9,964 46,154 Bonds 302,570 302,582 301,936 Lease liabilities 64,475 - - Total 444,412 312,546 348,090

Current borrowings Loans from financial institutions 64,069 31,318 3,846 Bonds - 38,637 - Commercial papers 119,902 59,983 49,991 Lease liabilities 15,744 - - Total 199,715 129,938 53,837

The increase in borrowings during Q2, is mainly due to the EUR 145 4. million dividend payment in the beginning of April and the EUR 27 5. million ICT Elmo Oy business combination in the end of May .

DNA Plc Half-Year Financial Report January–June 2019 41

7 Net debt

EUR in thousands 30 June 2019 30 June 2018 31 December 2018

Non-current borrowings 444,412 312,546 348,090 Current borrowings 199,715 129,938 53,837 Total borrowings 644,128 442,484 401,927 Less cash and cash equivalents 36,614 23,575 22,654 Net debt 607,513 418,909 379,273

Change in net debt Reported in cash flows from financing activities

Current Non-current EUR in thousands Cash borrowings borrowings Net debt 1 January 2018 23,592 154,518 173,362 304,288 Change in cash –937 937 Proceeds from borrowings 563,726 296,154 859,880 Repayment of borrowings –665,123 –113,810 –778,932 Other non-cash transactions 715 –7,616 –6,901 31 December 2018 22,654 53,837 348,090 379,273 1 January 2019 IFRS 16 standard 14,775 67,329 82,104 Change in cash 13,960 –13,960 Proceeds from borrowings 466,785 34,064 500,849 Repayment of borrowings –349,941 –349,941 Other non-cash transactions 14,259 –5,070 9,188 30 June 2019 36,614 199,715 444,412 607,513

DNA Plc Half-Year Financial Report January–June 2019 42

8 Provisions

Other/ EUR in thousands 1 January 2019 Additions Provisions used Discount effect 30 June 2019

Asset retirement obligation 4,788 0 – – 4,789 Restructuring provisions 97 – – – 97 Other provision 208 – – – 208 Total 5,094 5,094

Asset retirement obligation The asset retirement obligation provision comprise the estimated dismantling and demolition costs of data centres, masts and telephone poles . The asset retirement period for telephone poles is estimated at 15 years, and 25 years for data centres and masts . Realising the dismantling and demolition costs do not involve any significant uncertainties .

DNA Plc Half-Year Financial Report January–June 2019 43

9 Related party transactions

DNA's related parties include the main shareholders including the CEO and the deputy CEO as well as their (Finda Oy, Finda Telecoms Oy, PHP Holding Oy) which close family members . In addition, related parties include have significant influence over the group, subsidiaries, all entities controlled or jointly controlled by a person associated companies, joint arrangements and members idenfitied as related party . of the Board of Directors and the management team,

The following related party transactions were carried out: Jan–Jun 2019

EUR in thousands Organisations exercising significant influence Associated companies

Sales 9 - Purchases 1,152 216 Receivables 2 - Liabilities 263 -

Jan–Jun 2018

EUR in thousands Organisations exercising significant influence Associated companies Sales 9 - Purchases 1,340 229 Receivables 2 - Liabilities 205 34

Jan–Dec 2018

EUR in thousands Organisations exercising significant influence Associated companies Sales 21 - Purchases 2,759 465 Receivables 2 - Liabilities 354 2

DNA Plc Half-Year Financial Report January–June 2019 44

10 Share-based payments

Long-term share-based incentive scheme for DNA's cumulative cash flow in 2018–2020 . The programme senior management and other key employees has around 50 participants, and the maximum number of DNA's Board of Directors decides to continue the shares to be distributed will be 372,600 (the gross amount long-term incentive plans for senior executives and other from which the applicable withholding tax will be deduced, key employees . DNA has a Performance Share Plan (PSP) and the remaining net amount will be paid as shares) . for senior executives and other key employees . The PSP consists of three separate three-year performance periods; The programme PSP 2019–2021 starts at the beginning of 2017–2019, 2018–2020 and 2019–2021 . 2019 . Any share-based rewards earned through it will be paid in the spring of 2022 . The performance targets applied The purpose of the long-term incentive system is to to the programme are DNA's EBITDA development over harmonise shareholders' and senior executives' goals in the period 2019–2021 and DNA's total shareholder return order to increase DNA's value, and to commit executives compared to a peer group over the period 2019–2021 . The and other key employees to DNA by offering them a programme has around 70 participants, and the maximum competitive, long-term reward plan in the company . number of shares to be distributed will be 382,158 (the gross amount from which the applicable withholding tax The system mainly consists of a Performance Share Plan will be deduced, and the remaining net amount will be paid (PSP), which is complemented by a separate share-based as shares) . Bridge Plan . In addition, DNA has a Restricted Share Plan (RSP) . The Bridge Plan The Bridge Plan for the transition period consists of The Performance Share Plan two, three-year-long share-based reward programmes . The Performance Share Plan consists of separate, share- These programmes have a year-long vesting period and a based reward programmes that begin annually . Each two-year restriction period . The first programme began in programme has a three-year vesting period . The start of 2017 . Share-based rewards based on the 2017 programme each new programme requires a separate decision by the were handed out in the spring of 2018, because the Board of Directors . performance targets set by the Board of Directors were reached (EBITDA and EBITDA margin among others) . The first programme (PSP 2017) started at the beginning Shares received as a reward cannot be transferred during of 2017 . Any share-based rewards earned through it will be a two-year restriction period after the vesting period . paid in the spring of 2020, if the performance targets set by the Board of Directors are reached . The performance targets applicable to the share-based reward system during the transition period are based on The first programme will be built on the following DNA’s key strategic objectives for the vesting periods in performance targets: DNA’s total shareholder return (TSR) question . The first programme has about 50 participants, compared to a peer group over the period 2017–2019, and the maximum number of shares to be handed out and DNA’s cumulative cash flow in 2017–2019 . The first will be 157,300 (gross amount from which applicable programme has about 50 participants, and the maximum withholding tax will be deducted, and the remaining net number of shares to be handed out will be 471,000 (gross amount will be paid as shares) . amount from which applicable withholding tax will be deduced, and the remaining net amount will be paid as The performance targets applicable to the share-based shares) . reward programme, the Bridge Plan 2018, which began in January 2018, are based on DNA's key strategic objectives The second programme PSP 2018–2020 started at the for the vesting period in question . Share-based rewards beginning of 2018 . Any share-based rewards earned based on the 2018 programme were handed out in the through it will be paid in the spring of 2021, if the spring of 2019, because the performance targets set by performance targets set by the Board of Directors the Board of Directors were reached (EBITDA and EBITDA are achieved . The performance targets applied to the margin among others) . Shares received as a reward cannot programme are DNA's total shareholder return (TSR) be transferred during a two-year restriction period after the compared to a peer group over the period 2018–2020, and vesting period .

DNA Plc Half-Year Financial Report January–June 2019 45

10 Share-based payments

The programme has around 50 participants, and the will be distributed in the spring of 2019, if the performance maximum number of shares to be handed out will be targets set by the Board of Directors are achieved . Shares 115,900 (gross amount from which applicable withholding received as a reward cannot be transferred during the tax will be deduced, and the remaining net amount will two-year restriction period after the vesting period . be paid as shares) . Any rewards based on the programme

Share-based reward plan PSP 2019–2021 PSP 2018–2020 Bridge plan 2018 PSP 2017–2019 Bridge plan 2017

Grant date 30 January 2019 17 January 2018 17 January 2018 15 February 2017 15 February 2017 Maximum number of shares 382,158 372,600 115,900 471,000 157,300 Fair value of the reward at grant date 9 6. 6 6 12. 6 .28 Share price at grant date 18 .39 15 07. 15 07. 11 .36 11 .36 Valid until 31 December 2021 31 December 2020 31 December 2020 31 December 2019 31 December 2019 Expected volatility of share prices 19% 23% Expected dividends 3 12. 1 02. 0 6. 3–0 7. 5 Risk-free interest rate –0 .29% –0 82%–0. 7. 4% Expected life 3 years 3 years 3 years 3 years 3 years Implementation As shares and cash As shares and cash As shares and cash As shares and cash As shares and cash

The fair value of the PSP 2017–2019 reward at grant date situations, such as during acquisitions and recruitment . was 6,28 . The fair value of the PSP 2018–2020 awared at The Restricted Share Plan consists of share-based grant date was 6,12 . The fair value at grant date was valued incentive programmes that begin every year . Each program using a Monte Carlo simulation model, taking into account consists of a three-year restriction period, after which share price at grant date, Volume Weighted Average Price the shares allocated in the beginning of each respective (VWAP), expected dividends, risk-free interest rates, programme are paid to the participants, provided that expected volatility of share prices, as well as correlation their employment DNA continues until the payment of coefficients . the rewards . The start of each new programme requires a separate decision by the Board of Directors . Based on the Board of Directors' decision, DNA Plc has on 1 March 2019 transferred 61,473 of the company's The RSP typically applies to only a few individuals per year . treasury shares to persons belonging to the share- The rewards earned of the first programme (RSP 2017) will based remuneration scheme, Bridge Plan 2018 for the be distributed in 2020 . The maximum number of shares performance period 2018, as settlement in accordance distributed under the programme is 42,900 (gross amount with the plan rules . Withholding tax of EUR 0 7. million was from which applicable withholding tax will be deduced, deduced from the gross amount . and the remaining net amount will be paid as shares) . The rewards earned of the RSP 2018–2020 share-based Based on the Board of Directors' decision, DNA Plc has reward programme will be distributed in the spring of 2021 . on 1 March 2018 transferred 82,028 of the company's The maximum number of shares distributed under the treasury shares to persons belonging to the share- programme is 45,000 (gross amount from which applicable based remuneration scheme, Bridge Plan 2017 for the withholding tax will be deduced, and the remaining net performance period 2017, as settlement in accordance amount will be paid as shares) . The rewards earned of the with the plan rules . Withholding tax of EUR 1 1. million was RSP 2019–2021 share-based reward programme will be deduced from the gross amount . distributed in the spring of 2022 . The maximum number of shares distributed under the programme is 37,500 (gross The restricted share-based reward system (RSP) amount from which applicable withholding tax will be The restricted share-based reward system can be used as a deduced, and the remaining net amount will be paid as complementary tool for committing employees in specific shares) .

DNA Plc Half-Year Financial Report January–June 2019 46

10 Share-based payments

Share-based reward plan RSP 2017–2019 RSP 2018–2020 RSP 2019–2021

Grant date 9 April 2019 9 April 2019 9 April 2019 Maximum number of shares 42,900 45,000 37,500 Fair value of the reward at grant date 20 12. 20 12. 19 11. Share price at grant date 21 14. 21 14. 21 14. Valid until 30 April 2020 15 March 2021 15 March 2022 Expected life 3 years 3 years 3 years Implementation As shares and cash As shares and cash As shares and cash

Matching shares plan of DNA personnel The Board of Directors of DNA Plc has decided on The first saving period in 2019–2020 begins in April 2019 and the establishment of a matching shares plan for all will run until March 2020 . Each employee may participate in DNA personnel . The purpose of the plan is to steer one saving period at a time, with the saved shares purchased the activities of personnel towards the attainment of quarterly at market value after the publication of financial strategic objectives, as well as to improve the long-term results . Participants may purchase shares up to a value of commitment of personnel and offer incentives in the form 500 euros per month . The matching shares issued for the of potential increase in share value . saved shares will be paid in a single instalment at the end Participation in the matching shares plan is voluntary . of the holding period, with DNA issuing each participant one matching share for two purchased shares . The Board of Directors of DNA will decide annually on possible new saving periods and their terms .

Share-Based payments

EUR in thousands Expense recorded in the income statement Jan–Jun 2019 Jan–Jun 2018 Jan–Dec 2018 Share-based payments 1,863 1,508 2,719

DNA Plc Half-Year Financial Report January–June 2019 47

11 Business combinations

DNA Plc acquired the entire capital stock of European The purchase price was paid in cash . The assets and Mobile Operator Oy and Moi Mobiili Oy on 11 January liabilibites were preliminary reported in the interim 2019 . European Mobile Operator Oy's wholly-owned statement 31 March 2019 at their carrying amounts and subsidiary Moi Mobiili Oy provides mobile services to have now been adjusted to their fair value . The goodwill private and corporate customers . It has operated since consist of synergy benefits expected and the knowledge of 2016 as a service operator in the DNA mobile network . The the personnel transferred . acquisition is a natural continuation in implementing DNA's growth strategy .

Fair value EUR in millions recorded

Intangible assets 6 .5 Accounts receivable and other receivables 1 0. Cash and cash equivalents 0 0. Total assets 7.4

Borrowings 1 8. Deferred tax liabilities –0 .3 Trade and other payables 2 0. Total liabilities 3.6

Net assets 3.9

Total consideration transferred 15 4. Goodwill 11 .5

Direct costs of EUR 0 .3 million were recorded as other operating expenses . The acquired subsidiaries' net sales since acquisition was EUR 4 8. million . As the acquisition took place 11 January 2019 the group's net sales and result would have been on the same level year to date .

ICT Elmo consumer and housing company business acquisition DNA has on 31 May 2019 agreed to purchase an extensive Direct costs of EUR 0 .2 million are recorded as other fibre-optic network infrastructure used by ICT Elmo Oy operating expenses . (formerly Tampereen Puhelin) as well as its consumer and housing company business . The acquired subsidiaries' net sales since acquisition was EUR 0 4. million . Had the acquisition occurred 1 January The purchase price was paid in cash . The fair value 2019, Group net sales would have been EUR 463,1 assessment of the transferred assets and liabilities has million . not yet been made . Assets and liabilities are recorded preliminary:

Assets 27 6. Liabilities 0 1. Total consideration transferred 27 .5

DNA Plc Half-Year Financial Report January–June 2019 48

12 Changes in accounting policy IFRS 16

At the initial application on January 1, 2019 all right-of-use assests, with the exception of prepaid assets, were recorded with an equivalent value recorded for the related lease liabilities . As a result, the Group’s non-current assets and non-current liabilities increased .

Consolidated statement of financial position 1 January 2019 Changes in accounting policy Adjusted EUR in thousands 31 December 2018 IFRS 16 1 January 2019

ASSETS Non-current assets Goodwill 327,206 - 327,206 Other intangible assets 191,783 - 191,783 Property, plant and equipment 412,550 - 412,550 Right-of-use assets - 84,439 84,439 Investments in associates 1,209 - 1,209 Other investments 117 - 117 Trade and other receivables 76,026 –2,467 73,559 Deferred tax assets 7,691 - 7,691 Total non-current assets 1,016,582 81,972 1,098,554

Current assets Inventories 31,681 - 31,681 Trade and other receivables 201,037 - 201,037 Other current receivables 1,439 - 1,439 Accruals 42,148 –358 41,790 Cash and cash equivalents 22,654 - 22,654 Total current assets 298,960 –358 298,602

Total assets 1,315,541 81,614 1,397,155

Equity Equity attributable to owners of the parent Total equity 604,770 - 604,770

DNA Plc Half-Year Financial Report January–June 2019 49

12 Changes in accounting policy IFRS 16

Changes in accounting policy Adjusted EUR in thousands 31 December 2018 IFRS 16 1 January 2019

LIABILITIES Non-current liabilities Borrowings 348,090 - 348,090 Lease liabilities - 67,329 67,329 Employment benefit obligations 1,714 - 1,714 Provisions 5,307 –422 4,885 Deferred tax liabilities 34,825 - 34,825 Other non-current liabilities 34,978 - 34,978 Total non-current liabilities 424,914 66,907 491,821

Current liabilities Borrowings 53,837 - 53,837 Lease liabilities - 14,775 14,775 Provisions 277 –68 208 Trade and other payables 226,687 - 226,687 Income tax liabilities 5,056 - 5,056 Total current liabilities 285,857 14,707 300,564

Total equity and liabilities 1,315,541 81,614 1,397,155

DNA Plc Half-Year Financial Report January–June 2019 50

12 Changes in accounting policy IFRS 16

Consolidated income statement

Other operating expenses decrease as leases are now disclosed as depreciation and interest expenses . Additionnally, deferred tax is recognised in the income tax expense .

1.1.–30.6.2019 1.1.–30.6.2019 EUR in thousands excluding IFRS 16 IFRS 16 including IFRS 16

Net sales 460,906 - 460,906 Other operating income 1,865 - 1,865 Materials and services –194,921 - –194,921 Employee benefit expenses –56,301 - –56,301 Depreciation, amortisation and impairments –74,336 –9,064 –83,400 Other operating expenses –66,719 9,079 –57,640 Operating result, EBIT 70,494 15 70,508

Finance income 233 - 233 Finance expense –4,394 –742 –5,135 Share of associates' results 0 - 0 Net result before income tax 66,333 –727 65,606

Income tax expense –14,207 47 –14,160 Net result for the period 52,126 –680 51,446 Attributable to: Owners of the parent 52,126 –680 51,446

DNA Plc Half-Year Financial Report January–June 2019 51

13 Events after the review date

DNA Plc Half-Year Financial Report January–June 2019 DNA’s financial publications and AGM in 2019: ■■ Interim Report January–September 2019, 22 October 2019 ■■ Capital Markets Day in Helsinki, 26 November 2019

DNA Plc • Läkkisepäntie 21, FI–00620 Helsinki • www dna. fi/investors. ANNEX C

ARTICLES OF ASSOCIATION OF DNA PLC ARTICLES OF ASSOCIATION OF DNA OYJ

1 § TRADE NAME AND DOMICILE OF THE COMPANY

The trade name of the company is DNA Oyj, and it is domiciled in Helsinki. The parallel trade name of the company in English is DNA Plc and in Swedish DNA Abp.

2 § LINE OF BUSINESS

The line of business of the company is general telecommunications and the provision of data communications, ICT, entertainment and television services. The company also imports equipment, devices, accessories and software and acts as a trader and an intermediary. In addition, the company provides consulting and services related to the above‐mentioned operations as well as telephone and other types of communications. The company also has the right to offer payment services. The payment services provided by the company are listed in the register of payment service providers of the Financial Supervisory Authority. The company may own real estate and securities, engage in securities trading and conduct investment and finance operations that support the company’s line of business.

3 § BOARD OF DIRECTORS

The Board of Directors, which is elected at the General Meeting, is responsible for the administration and the appropriate organisation of the company's operations. The Board of Directors comprises a minimum of five (5) and maximum of nine (9) ordinary members. The term of office of a member of the Board of Directors expires at the end of the first Annual General Meeting following the election. The Board of Directors elects the chairman from among the members for each term of office. The Board of Directors is deemed to constitute a quorum when more than half of the members of the Board of Directors are present.

4 § CEO

The company has a CEO who is appointed by the Board of Directors.

5 § INCLUSION IN THE BOOK‐ENTRY SYSTEM

The shares of the company are in the book‐entry securities system.

6 § REPRESENTATION OF THE COMPANY

The company is represented by the CEO and the Chairman of the Board of Directors, each acting alone, and by two members of the Board of Directors acting together.

The Board of Directors may grant the right to represent the company and procurations to other persons.

7 § AUDITORS

The company has one (1) auditor, which shall be an audit firm with a responsible auditor who shall be an authorised public accountant. Their term of office of the auditor is the financial period, and the auditor's duty shall expire at the end of the first Annual General Meeting following the election.

8 § NOTICE OF GENERAL MEETING AND ADVANCE REGISTRATION

The notice convening a General Meeting shall be delivered to the shareholders by publishing it on the company's website no earlier than three (3) months and no later than three (3) weeks before the General Meeting, however, never later than nine (9) days before the record date of the General Meeting. To be entitled to attend the General Meeting, shareholders must register with the company by the date specified in the notice, which shall be no earlier than ten (10) days before the General Meeting. 9 § ANNUAL GENERAL MEETING

The Annual General Meeting must be held within six (6) months of the end of the financial period, at a date specified by the Board of Directors.

Items on the agenda of the Annual General Meeting shall include: the presentation of

1. the financial statements and report of the Board of Directors;

2. the auditors’ report; decisions on

3. the adoption of the financial statements, which, in the parent company, also involves the adoption of the consolidated financial statements;

4. the use of the profit shown on the balance sheet;

5. discharging the Members of the Board of Directors and the CEO from liability;

6. the number of members of the Board of Directors;

7. the compensation of the members of the Board of Directors and the auditor; the election of

8. the members of the Board of Directors;

9. the auditor; and consideration of

10. any other business specified in the notice of the meeting.

10 § FINANCIAL PERIOD

The company's financial period is one calendar year.